House of Representatives
Financial Sector Reform (Hayne Royal Commission Response - Protecting Consumers (2019 Measures)) Bill 2019
Replacement Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)This memorandum replaces the Explanatory Memorandum presented to the House of Representatives on 28 November 2019.
The full regulation impact statement can be accessed online through the Australian Parliament House website:
https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;adv=yes;orderBy=date-eFirst;page=1;query=%22Royal%20Commission%22%20Date%3A01%2F02%2F2019%20%3E%3E%2028%2F02%2F2019%20Dataset%3Atabledpapers;rec=9;resCount=Default
The full regulation impact statement can be accessed online through the Australian Parliament House website:
https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;adv=yes;orderBy=date-eFirst;page=1;query=%22Royal%20Commission%22%20Date%3A01%2F02%2F2019%20%3E%3E%2028%2F02%2F2019%20Dataset%3Atabledpapers;rec=9;resCount=Default
The full regulation impact statement can be accessed online through the Australian Parliament House website:
https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;adv=yes;orderBy=date-eFirst;page=1;query=%22Royal%20Commission%22%20Date%3A01%2F02%2F2019%20%3E%3E%2028%2F02%2F2019%20Dataset%3Atabledpapers;rec=9;resCount=Default
Page 308 of Volume 1 of the Financial Services Royal Commission Final Report.
Page 151 of the Australian Competition and Consumer Commission Northern Australian Insurance Inquiry First Interim Report.
Page 49 of the 2018 Parliamentary Joint Committee on Corporations and Financial Services inquiry into the life insurance industry Final Report.
Page 65 of the 2017 Senate Economics Inquiry into the general insurance industry Final Report.
Page 53 of the 2017 Australian Consumer Law Review Final Report.
Pages 4-5 of the Government Response to the 2017 Senate Economics Committee Inquiry into the general insurance industry.
Extending Unfair Contract Terms Protections to Insurance Contracts, June 2018.
Page 308 of Volume 1 of the Financial Services Royal Commission Final Report.
Page 25 of the Government Response to the Financial Services Royal Commission Final Report.
Note: A separate unfair contract terms regime operates under the National Consumer Law for non-financial products. As explained in 1.18, contracts of medical indemnity insurance are regulated separately and not subject to this unfair contract terms regime.
See paragraph 14, ASIC Report 516, Review of mortgage broker remuneration, March 2017.
Schedule 1 to the Credit Act contains the National Credit Code. The National Credit Code includes regulations made under the Credit Act for the purposes of the National Credit Code and instruments made under Schedule 1 of the Credit Act: see the definition of National Credit Code in section 5 of the Credit Act.
The new law also aims to ensure a broad interpretation of what constitutes an 'act' for the purposes of the new obligations, and also includes an omission or failure to act in the best interests of a consumer. In particular, the new law clarifies that for the purposes of the new law, a reference to doing an act or thing includes a reference to causing or authorising the act or thing to be done.
Similar considerations would apply where a mortgage broker suggests that a consumer apply for an increase to the credit limit in a particular credit contract.
These include an associate of the mortgage broker, a representative of the broker, an associate of a representative of the broker and, where the broker is a credit representative of a licensee, also includes any other representative of the licensee and their associates. For the purposes of this obligation, the law defines associate by reference to the definition of associate in subsection 204(2) of the National Credit Code (which includes related bodies corporates, suppliers in respect of whom the credit provider is a linked credit provider, and the officers, agents and employees of the credit provider or any such related body corporate or supplier). The regulations may also prescribe additional circumstances in which a person is an associate of another.
See Division 6 of that Part.