National Consumer Credit Protection Act 2009

SCHEDULE 1 - NATIONAL CREDIT CODE  

Note:

PART 4 - CHANGES TO OBLIGATIONS UNDER CREDIT CONTRACTS, MORTGAGES AND GUARANTEES  

Division 3 - Changes on grounds of hardship and unjust transactions  

78   Court may review unconscionable interest and other charges  

78(1)    
The court may, if satisfied on the application of a debtor or guarantor that:

(a) a change in the annual percentage rate or rates under a credit contract to which subsection 64(1) or (4) applies; or

(b) an establishment fee or charge; or

(c) a fee or charge payable on early termination of a credit contract; or

(d) a fee or charge for a prepayment of an amount under a credit contract;

is unconscionable, annul or reduce the change or fee or charge and may make ancillary or consequential orders.

78(2)    
For the purposes of this section, a change to the annual percentage rate or rates is unconscionable if and only if it appears to the court that:

(a) it changes the annual percentage rate or rates in a manner that is unreasonable, having regard to any advertised rate or other representations made by the credit provider before or at the time the contract was entered into, the period of time since the contract was entered into and any other consideration the court thinks relevant; or

(b) the change is a measure that discriminates unjustifiably against the debtor when the debtor is compared to other debtors of the credit provider under similar contracts.

78(3)    
In determining whether an establishment fee or charge is unconscionable, the court is to have regard to whether the amount of the fee or charge is equal to the credit provider ' s reasonable costs of determining an application for credit and the initial administrative costs of providing the credit or is equal to the credit provider ' s average reasonable costs of those things in respect of that class of contract.

78(4)    
For the purposes of this section, a fee or charge payable on early termination of the contract or a prepayment of an amount under the credit contract is unconscionable if and only if it appears to the court that it exceeds a reasonable estimate of the credit provider ' s loss arising from the early termination or prepayment, including the credit provider ' s average reasonable administrative costs in respect of such a termination or prepayment.