Consumer Credit Legislation Amendment (Enhancements) Act 2012 (130 of 2012)

Schedule 1   Enhancements

Part 4   Prohibition on certain representations and other matters

National Consumer Credit Protection Act 2009

25   After Part 3-6

Insert:

Part 3-6A - Miscellaneous rules

Division 1 - Introduction

160A Guide to this Part

This Part has a number of miscellaneous rules that require responsible lending conduct when engaging in credit activities or particular types of credit activities. Some of these rules apply to a person even if the person is not required to be licensed.

Division 2 prohibits licensees from making particular representations when providing a credit service to a consumer.

Division 3 prohibits a person (whether licensed or not) from giving false or misleading information in the course of engaging in a credit activity.

Division 4 may require a credit provider or lessor (whether licensed or not) to give notice when, and in some cases before, giving an employer of a debtor or lessee an authorisation by the debtor or lessee to make deductions from amounts payable by the employer to the debtor or lessee.

Division 2 - Representations

160B "Independent", "impartial" or "unbiased" etc.

(1) A licensee must not, in providing or offering to provide a credit service to a consumer, use any of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about the licensee, the service or the licensee's actions in providing the service:

(a) the word "independent";

(b) the word "impartial";

(c) the word "unbiased";

(d) another term (whether or not in English) that is of similar import to a word mentioned in paragraph (a), (b) or (c).

Civil penalty: 2,000 penalty units.

Defences

(2) For the purposes of subsection (1), it is a defence if:

(a) the licensee does not receive any of the following:

(i) commissions (apart from commissions that are rebated in full to the licensee's clients);

(ii) other gifts or benefits from a credit provider or a lessor that may reasonably be expected to influence the licensee; and

(b) in providing a credit service, the licensee operates free from direct or indirect restrictions relating to the credit contracts and consumer leases to which the service relates (except restrictions imposed on the licensee by this Act or by an Australian credit licence); and

(c) in providing a credit service, the licensee operates without any conflicts of interest that might:

(i) arise from the licensee's associations or relationships with credit providers and lessors; and

(ii) reasonably be expected to influence the licensee in providing the service; and

(d) neither of the following persons receives any commission, gift, or benefit, covered by paragraph (a):

(i) the licensee's employer (if any);

(ii) any other person prescribed (whether by reference to a class of person or otherwise) by the regulations.

(3) For the purposes of subsection (1), it is a defence if the representation uses any of the terms in the negative (for example, a representation that the licensee is not independent).

160C "Financial counsellor" etc.

(1) A licensee must not, in providing or offering to provide a credit service to a consumer, use any of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about the licensee, the service or the licensee's actions in providing the service:

(a) the phrase "financial counsellor";

(b) the phrase "financial counselling";

(c) another term (whether or not in English) that:

(i) is of similar import to a phrase mentioned in paragraph (a) or (b); and

(ii) is prescribed by the regulations.

Civil penalty: 2,000 penalty units.

Defences

(2) For the purposes of subsection (1), it is a defence if regulations made for the purposes of paragraph 110(a) exempt the licensee from section 29 in relation to a credit activity because the licensee engages in the activity as part of a financial counselling service.

(3) For the purposes of subsection (1), it is a defence if:

(a) the licensee is providing, or offering to provide, the credit service on behalf of another person (the principal ); and

(b) the licensee is a representative of the principal; and

(c) regulations made for the purposes of paragraph 110(a) exempt the principal from section 29 in relation to a credit activity because the principal engages in the activity as part of a financial counselling service; and

(d) the licensee's actions in providing or offering to provide the credit service are within the authority of the principal.

(4) For the purposes of subsection (1), it is a defence if the representation uses any of the terms in the negative (for example, a representation that the licensee is not a financial counsellor).

Division 3 - Giving misleading information

160D Prohibition on giving misleading information etc.

Prohibition on giving misleading information etc.

(1) A person (the giver ) must not, in the course of engaging in a credit activity, give information or a document to another person if the giver knows, or is reckless as to whether, the information or document is:

(a) false in a material particular; or

(b) materially misleading.

Civil penalty: 2,000 penalty units.

Offence

(2) A person commits an offence if:

(a) the person gives information or a document to another person; and

(b) the person does so in the course of engaging in a credit activity; and

(c) the information or document is false in a material particular or materially misleading.

Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.

Division 4 - Giving authorisation for deductions by employer of debtor or lessee

160E Requirements for giving authorisation to employer

(1) This section applies to a credit provider or lessor giving, or intending to give, an employer of a debtor or lessee who is party to a credit contract or consumer lease with the credit provider or lessor an instrument that:

(a) was made by the debtor or lessee; and

(b) authorises the employer to:

(i) make one or more deductions from one or more amounts payable by the employer in relation to the performance of work by the debtor or lessee; and

(ii) pay the deductions to the credit provider or lessor.

Credit provider or lessor must give statement to employer

(2) If the credit contract or consumer lease is of a kind prescribed by the regulations, the credit provider or lessor must give the employer a statement, in the form prescribed by the regulations for that kind of contract or lease, with the instrument.

Civil penalty: 2,000 penalty units.

Credit provider or lessor must give 7 days' notice to defaulting debtor or lessee

(3) If the debtor or lessee is in default under the credit contract or consumer lease, the credit provider or lessor must give the debtor or lessee at least 7 days' notice, in a form prescribed by the regulations, of the intention of the credit provider or lessor to give the instrument to the employer.

Civil penalty: 2,000 penalty units.

(4) To avoid doubt, subsection (3) does not apply if there are not regulations in force prescribing a form for the purposes of that subsection.

Subsections (2) and (3) do not apply to some credit contracts

(5) Subsections (2) and (3) do not apply in relation to a credit contract for the provision of credit relating to the provision of goods or services to the debtor in connection with the debtor's remuneration, or other benefits, for the debtor's employment.