Financial Sector Reform Act 2022 (87 of 2022)

Schedule 4   Consumer credit reforms

Part 2   Consumer leases

National Consumer Credit Protection Act 2009

50   After section 175A of the National Credit Code

Insert:

175AA Cap on fees and charges for consumer leases

Overall cap for every consumer lease

(1) A lessor must not enter into, or vary, a consumer lease so that the total amount that would be payable by the lessee in connection with the lease (including any applicable taxes and any add-on fees) is more than the permitted cap for the lease.

Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Monthly cap for consumer lease for indefinite period

(2) A lessor must not enter into, or vary, a consumer lease for an indefinite period so that the total amount that would be payable by the lessee in connection with the lease (including any applicable taxes and any add-on fees) in any month is more than 1/48 of the permitted cap for the lease.

Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

What is an add-on fee ?

(3) An add-on fee for a consumer lease is any fee or charge (whether an interest charge or not) for which the following conditions are met:

(a) the fee or charge is one that:

(i) the lessee is liable to pay to the lessor; or

(ii) the lessee is liable to pay to another person under an agreement facilitated by or on behalf of the lessor or the other person;

(b) the fee or charge relates to a service or product that either:

(i) facilitates or complements the lessee's use of the goods hired under the consumer lease; or

(ii) is marketed or offered by the lessor or another person as being complementary to the lessee's use of the goods hired under the consumer lease;

(c) either:

(i) failure by the lessee to pay the fee or charge, or to acquire a service or product to which the fee or charge relates, affects the lessee's rights or obligations under the consumer lease; or

(ii) the lessor or another person has represented to the lessee that failure by the lessee to pay the fee or charge, or to acquire a service or product to which the fee or charge relates, will or may affect the lessee's rights or obligations under the consumer lease.

Amounts that do not count against caps

(4) For the purposes of subsections (1) and (2), the following amounts are not included in the total amount payable by the lessee in connection with the consumer lease:

(a) a fee or charge that is payable in the event of a default in payment under the consumer lease;

(b) enforcement expenses of an amount not exceeding the amount which could be recovered by the lessor under subsection 179R(1).

What is the permitted cap ?

(5) The permitted cap for a consumer lease is the sum of the following amounts:

(a) the base price of the goods hired under the consumer lease;

(b) the amount worked out by multiplying the base price of the goods hired under the consumer lease by:

(i) in the case of a consumer lease for a fixed term - 0.04 multiplied by the number of whole months of the consumer lease, up to a maximum of 48 months; or

(ii) in the case of a consumer lease for an indefinite period - 1.92;

(c) the permitted delivery fee (if any) for the consumer lease;

(d) the permitted installation fees (if any) for the consumer lease;

(e) the permitted add-on fees (if any) for the consumer lease.

What is the base price of goods?

(6) The base price of the goods hired under a consumer lease is the amount worked out in accordance with the regulations.

What is a permitted delivery fee ?

(7) A fee or charge is a permitted delivery fee for a consumer lease if it:

(a) is for the delivery to the lessee, at the lessee's request, of the goods hired under the consumer lease; and

(b) is limited to the reasonable cost of delivery of the goods to the lessee.

What are permitted installation fees ?

(8) ASIC may, by legislative instrument, declare that specified fees which relate to installation of particular kinds of goods hired under a consumer lease are permitted installation fees for the lease.

What are permitted add-on fees ?

(9) ASIC may, by legislative instrument, declare that specified add-on fees for a consumer lease are permitted add-on fees for the lease.

175AB Imposing fees or charges above the permitted cap - offence

A person commits an offence if:

(a) the person is subject to a requirement under subsection 175AA(1) or (2); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 100 penalty units.

175AC Lessee may recover fees and charges exceeding base price if cap is breached

If a lessor contravenes subsection 175AA(1) or (2) in relation to a consumer lease:

(a) the lessee is not liable (and is taken never to have been liable) to pay any amount under the consumer lease that exceeds the base price of the goods hired under the consumer lease (whether or not the liability is imposed consistently with this Code); and

(b) the lessee may recover as a debt due to the lessee the amount of any payment made by the lessee that, in accordance with paragraph (a), the lessee is not liable to pay.