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

Schedule 2   Reverse mortgages

Part 3   Provisions applying to credit providers generally

National Consumer Credit Protection Act 2009

13   After section 18 of the National Credit Code

Insert:

18A Provisions that must not be included in credit contract for reverse mortgage

(1) A credit provider must not enter into a credit contract for a reverse mortgage that provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).

(2) A credit provider must not agree to change, or unilaterally change, a credit contract for a reverse mortgage so that it provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).

(3) For the purposes of subsections (1) and (2), the events are as follows:

(a) the debtor failing to inform the credit provider that another person occupies the reverse mortgaged property;

(b) the debtor failing, when the debtor occupies the reverse mortgaged property, to give the credit provider evidence that the debtor, or another person nominated by the debtor to the credit provider, occupies or occupied the reverse mortgaged property;

(c) the debtor leaving the reverse mortgaged property unoccupied while it is the debtor's principal place of residence;

(d) the debtor failing to pay a cost to a person other than the credit provider within 3 years after the payment became due;

(e) the debtor failing to comply with a provision of the credit contract if the contract does not make it clear how the debtor is to comply with the provision;

(f) the debtor breaching another credit contract with the credit provider;

(g) an event that involves an act or omission by the debtor and is prescribed by the regulations.

18B Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor

(1) This section applies if a proposed credit contract for a reverse mortgage does not include a provision (a tenancy protection provision ) for a person other than the debtor to have a right against the credit provider to occupy the reverse mortgaged property.

(2) A person must not provide a credit service relating to the contract unless the person has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.

Criminal penalty: 50 penalty units.

(3) Subsection (2) does not apply if the person is or will be the credit provider under the contract.

(4) The credit provider must not enter into the contract unless the credit provider has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.

Criminal penalty: 50 penalty units.

(5) An offence against subsection (2) or (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

18C Independent legal advice before entry into credit contract for reverse mortgage

(1) The regulations may regulate or prohibit the entry by a credit provider into a credit contract for a reverse mortgage if the debtor has not obtained legal advice, in accordance with the regulations, about the contract or reverse mortgage.

(2) The regulations may provide for offences and civil penalties for contraventions of regulations made for the purposes of subsection (1).

(3) The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 250 penalty units for a body corporate.

(4) The civil penalties described in subsection (2) must not be more than 500 penalty units for an individual or 2,500 penalty units for a body corporate.