National Consumer Credit Protection Act 2009

CHAPTER 3 - RESPONSIBLE LENDING CONDUCT  

PART 3-1 - LICENSEES THAT PROVIDE CREDIT ASSISTANCE IN RELATION TO CREDIT CONTRACTS  

Division 6 - Prohibition on suggesting, or assisting with, unsuitable credit contracts  

SECTION 123   PROHIBITION ON SUGGESTING OR ASSISTING CONSUMERS TO ENTER, OR INCREASE THE CREDIT LIMIT UNDER, UNSUITABLE CREDIT CONTRACTS  
Prohibition on suggesting, or assisting with, unsuitable contracts

123(1)    
A licensee must not provide credit assistance to a consumer by:

(a)    suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or

(b)    

suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider;

if the contract will be unsuitable for the consumer under subsection (2) .

Civil penalty: 5,000 penalty units.

When the contract will be unsuitable

123(2)    
The contract will be unsuitable for the consumer if, at the time the licensee provides the credit assistance, it is likely that:

(a)    the consumer will be unable to comply with the consumer ' s financial obligations under the contract, or could only comply with substantial hardship; or

(b)    the contract will not meet the consumer ' s requirements or objectives; or

(c)    if the regulations prescribe circumstances in which a credit contract is unsuitable - those circumstances will apply to the contract;

if the contract is entered in the period proposed for it to be entered or the credit limit is increased in the period proposed for it to be increased.

123(3)    
For the purposes of paragraph (2)(a) , it is presumed that, if the consumer could only comply with the consumer ' s financial obligations under the contract by selling the consumer ' s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.

123(3AA)    

For the purposes of paragraph (2)(a) , a consumer is taken to be able to comply with the consumer ' s financial obligations under a contract only with substantial hardship if:

(a)    the contract is a credit card contract; and

(b)    the consumer could not comply with an obligation to repay an amount equal to the credit limit of the contract within the period determined by ASIC under section 160F .

123(3A)    
(Repealed by No 87 of 2022)

Information to be used to determine if contract will be unsuitable

123(4)    
For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:

(a)    the information is about the consumer ' s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e) ;

(b)    at the time the licensee provides the credit assistance:

(i) the licensee had reason to believe that the information was true; or

(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117 .

Credit contract not unsuitable under regulations

123(5)    
The regulations may prescribe particular situations in which a credit contract is taken not to be unsuitable for a consumer, despite subsection (2) .

Offence

123(6)    

A person commits an offence if:

(a)    the person is subject to a requirement under subsection (1) ; and

(b)    the person engages in conduct; and

(c)    the conduct contravenes the requirement.

Criminal penalty: 2 years imprisonment.