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

Schedule 2   Reverse mortgages

Part 2   Provisions applying to licensees

National Consumer Credit Protection Act 2009

10   Before Part 3-3

Insert:

Part 3-2D - Licensees and reverse mortgages

133DA Guide to this Part

This Part has rules that apply to licensees that provide credit services or are credit providers.

Before providing credit assistance, or entering into a credit contract, for a reverse mortgage, licensees must provide projections of the debtor's equity in the property that may be covered by the reverse mortgage.

Licensees must also make reverse mortgage information statements available on their websites and on request.

Licensees must not inaccurately use terms like "reverse mortgage" in making representations about credit contracts and mortgages.

133DB Giving projections of equity before providing credit assistance or entering credit contract

Requirement to give projections

(1) Before a licensee makes a preliminary assessment for the purposes of paragraph 115(1)(c) or (2)(a), or an assessment for the purposes of paragraph 128(c), in connection with a credit contract with a consumer for a reverse mortgage, the licensee must:

(a) show the consumer in person, or give the consumer in a way prescribed by the regulations, projections that:

(i) relate to the value of the dwelling or land that may become reverse mortgaged property, and the consumer's indebtedness, over time if the consumer were to enter into a contract for a reverse mortgage; and

(ii) are made in accordance with the regulations by using a website approved by ASIC; and

(b) give the consumer a printed copy of the projections; and

(c) tell the consumer in person the things (if any) that relate to reverse mortgages and are prescribed by the regulations; and

(d) give the consumer a reverse mortgage information statement.

Civil penalty: 2,000 penalty units.

Offence

(2) 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 person's conduct breaches the requirement.

Criminal penalty: 50 penalty units.

Defences for not giving projections

(3) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the licensee reasonably believes that:

(a) another person has:

(i) shown the consumer in person projections described in paragraph (1)(a); and

(ii) given the consumer a printed copy of the projections; and

(b) the projections are the same, or substantially the same, as those paragraph (1)(a) requires the licensee to show the consumer.

Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (3) (see subsection 13.3(3) of the Criminal Code).

(4) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the circumstances prescribed by the regulations exist.

Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).

Defence for not giving reverse mortgage information statement

(5) For the purposes of paragraph (1)(d), and of subsection (2) so far as it relates to that paragraph, it is a defence if the licensee reasonably believes that another person has given the consumer a reverse mortgage information statement in the last 90 days.

Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (5) (see subsection 13.3(3) of the Criminal Code).

133DC Making reverse mortgage information statement available on website of credit provider or credit assistance provider

When this section applies

(1) This section applies if a licensee:

(a) is:

(i) a person who provides, or holds himself or herself out as able to provide, credit assistance relating to credit contracts for reverse mortgages; or

(ii) a credit provider under one or more credit contracts for a reverse mortgages; and

(b) has a website that provides information about such contracts.

Requirement

(2) The licensee must make available through the website a reverse mortgage information statement.

Civil penalty: 2,000 penalty units.

Offence

(3) A person commits an offence if:

(a) the person is subject to a requirement under subsection (2); and

(b) the person engages in conduct; and

(c) the person's conduct breaches the requirement.

Criminal penalty: 50 penalty units.

133DD Making reverse mortgage information statement available in other situations

When this section applies

(1) This section applies if:

(a) a licensee is:

(i) a person who provides, or holds himself or herself out as able to provide, credit assistance relating to credit contracts for reverse mortgages; or

(ii) a credit provider under one or more credit contracts for reverse mortgages; and

(b) either:

(i) a consumer asks the licensee (otherwise than by using a website of the licensee) for a reverse mortgage information statement; or

(ii) the regulations require a consumer, in circumstances prescribed by the regulations, to be given a reverse mortgage information statement; and

(c) the consumer gives the licensee the consumer's name, and the contact details required by the regulations.

Requirement

(2) The licensee must, in accordance with any requirements prescribed by the regulations, give the consumer a reverse mortgage information statement.

Civil penalty: 2,000 penalty units.

Offence

(3) A person commits an offence if:

(a) the person is subject to a requirement under subsection (2); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 50 penalty units.

Defences

(4) For the purposes of subsections (2) and (3), it is a defence if:

(a) the licensee has given the consumer, or reasonably believes that someone else has given the consumer, a reverse mortgage information statement; or

(b) the licensee:

(i) is a credit provider under one or more credit contracts for reverse mortgages; and

(ii) reasonably believes that the consumer would not be eligible to make a credit contract with the licensee for a reverse mortgage; or

(c) there exist circumstances prescribed by regulations as circumstances in which the licensee is not required to give the consumer a reverse mortgage information statement.

Note: For the purposes of subsection (3), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).

133DE Representations that use the term "reverse mortgage" etc.

Credit service providers

(1) A licensee must not, in providing or offering to provide a credit service to a consumer, use either of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about an actual or proposed credit contract or mortgage:

(a) the phrase "reverse mortgage";

(b) another term (whether or not in English) of similar import to the phrase "reverse mortgage".

Civil penalty: 2,000 penalty units.

Credit providers

(2) A licensee that is a credit provider must not use either of the following terms (either alone or in combination with other words or letters) in a representation to a consumer about an actual or proposed credit contract or mortgage:

(a) the phrase "reverse mortgage";

(b) another term (whether or not in English) of similar import to the phrase "reverse mortgage".

Civil penalty: 2,000 penalty units.

Defence

(3) For the purposes of subsections (1) and (2), it is a defence if:

(a) the representation truly represents that a credit contract:

(i) is or will be a credit contract for a reverse mortgage; or

(ii) is not or will not be a credit contract for a reverse mortgage; or

(b) the representation truly represents that a mortgage:

(i) is or will be part of a reverse mortgage; or

(ii) is not or will not be part of a reverse mortgage.