National Consumer Credit Protection Reform Package introduced

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has introduced the Government's national consumer credit laws into Parliament.

The regime will establish a single, standard, national law for the regulation of consumer credit.

The new national regime includes:

• a national licensing regime regulating credit providers and providers of credit related services enforced by the Australian Securities Commission (ASIC) as the sole regulator (from 1 January 2010);
• responsible lending requirements (from 1 January 2011);
• compulsory dispute resolution mechanisms for credit providers;
• extension of consumer credit laws to residential investment property loans;
• an increase to the threshold for hardship claims to $500,000.

The Reform Package comprises three Bills:

• the National Consumer Credit Protection Bill 2009 (Credit Bill) which contains the licensing provisions and new National Credit Code (replacing the existing Consumer Credit Code);
• the National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009 (Transitional Bill); and
• the National Consumer Credit Protection (Fees) Bill 2009 (Fees Bill).

Subject to the passage of the Reform Package and reference legislation in each state, the Reform package will commence on 1 November 2009:

• Lenders and credit-service providers (such as brokers) will be required to register with ASIC between 1 November 2009 and 31 December 2009, and will have to apply for a licence by 30 June 2010 in order to continue to engage in credit activities.
• The responsible lending conduct obligations will commence on 1 January 2011 to provide industry time to put in place the systems, arrangements and training needed to comply with these obligations.

Langes is currently reviewing the draft bills in detail.

We will be discussing the legislation at our seminars in Brisbane, Sydney, Melbourne and Adelaide in August.(More information here).

Links:Treasury's Consumer Credit Website

Langes National Consumer Credit Reform website

ASIC;s National Consumer Credit Regulation page