Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (135 of 2020)

Schedule 11   Breach reporting and remediation

National Consumer Credit Protection Act 2009

16   Before section 52

Insert:

Subdivision C - Notifying and remediating consumers affected by reportable situations

51A Reporting to consumers affected by a reportable situation

Notifying an affected consumer of a reportable situation

(1) A licensee must take reasonable steps to notify a consumer (the affected consumer ) of a reportable situation in accordance with this section if:

(a) the licensee, or a representative of the licensee, provides or has provided credit assistance to the affected consumer in relation to a credit contract secured by a mortgage over residential property; and

(b) the licensee, or the representative of the licensee, is a mortgage broker; and

(c) there are reasonable grounds to believe that a reportable situation has arisen in relation to the licensee as mentioned in:

(i) paragraph 50A(1)(a) (significant breach of a core obligation); or

(ii) subsection 50A(2) (gross negligence or serious fraud); and

(d) there are reasonable grounds to suspect that:

(i) the affected consumer has suffered or will sufferloss or damage as a result of the reportable situation; and

(ii) the affected consumer has a legally enforceable right to recover the loss or damage from the licensee.

Civil penalty: 5,000 penalty units.

Form and period for giving notice

(2) A notice under this section must:

(a) be given in writing within 30 days after the licensee first knows of, or is reckless with respect to, the circumstances mentioned in paragraphs (1)(a), (b), (c) and (d); and

(b) if ASIC has approved the form in which the notice must be given:

(i) be in the approved form; and

(ii) include the information, statements, explanations or other matters required by the form; and

(iii) be accompanied by any other material required by the form.

Qualified privilege

(3) A licensee has qualified privilege in relation to a notice given under this section.

(4) A licensee who has qualified privilege under subsection (3) in respect of conduct is also not liable for any action based on breach of confidence in relation to that conduct.

51B Obligation to investigate reportable situations that may affect consumers

Obligation to investigate

(1) A licensee must conduct an investigation into a reportable situation in accordance with this section if:

(a) the licensee, or a representative of the licensee, has provided credit assistance to a consumer (the affected consumer ) in relation to a credit contract secured by a mortgage over residential property; and

(b) the licensee, or the representative of the licensee, is a mortgage broker; and

(c) there are reasonable grounds to believe that a reportable situation has arisen in relation to the licensee as mentioned in:

(i) paragraph 50A(1)(a) (significant breach of a core obligation); or

(ii) subsection 50A(2) (gross negligence or serious fraud); and

(d) there are reasonable grounds to suspect that:

(i) the affected consumer has suffered or will sufferloss or damage as a result of the reportable situation; and

(ii) the affected consumer has a legally enforceable right to recover the loss or damage from the licensee.

Civil penalty: 5,000 penalty units.

Period within which investigation must be commenced

(2) The investigation must be commenced within 30 days after the licensee first knows of, or is reckless with respect to, the circumstances mentioned in paragraphs (1)(a), (b), (c) and (d).

Matters to be considered in the investigation

(3) In conducting the investigation, the licensee must:

(a) identify the conduct that gave rise to the reportable situation; and

(b) quantify the loss or damage that there are reasonable grounds to believe:

(i) the affected consumer has suffered or will suffer as a result of the reportable situation; and

(ii) the affected consumer has a legally enforceable right to recover from the licensee; and

(c) do anything else prescribed by the regulations for the purposes of this paragraph.

Completing the investigation

(4) The investigation must be completed as soon as is reasonably practicable after it is commenced.

Notifying affected consumer

(5) The licensee must take reasonable steps to give the affected consumer a notice of the outcome of the investigation:

(a) in writing within 10 days after the investigation is completed; and

(b) if ASIC has approved the form in which the notice must be given:

(i) in the approved form; and

(ii) that includes the information, statements, explanations or other matters required by the form; and

(iii) that is accompanied by any other material required by the form.

Civil penalty: 5,000 penalty units.

(6) A licensee has qualified privilege in relation to a notice given under subsection (5).

(7) A licensee who has qualified privilege under subsection (6) in respect of conduct is also not liable for any action based on breach of confidence in relation to that conduct.

Compensating the affected consumer for loss or damage

(8) If, after the investigation is completed, there are reasonable grounds to believe that:

(a) the affected consumer has suffered or will suffer loss or damage as a result of the reportable situation; and

(b) the affected consumer has a legally enforceable right to recover the loss or damage from the licensee;

the licensee must take reasonable steps to pay the affected consumer an amount equal to the loss or damage within 30 days after the investigation is completed.

Civil penalty: 5,000 penalty units.

Nothing affects right of affected consumer to pursue legally enforceable rights

(9) Nothing in this section affects any legally enforceable right of the affected consumer to recover loss or damage that the affected consumer suffers, or will suffer, as a result of a reportable situation.

(10) However, a court may take into account the amount paid by the licensee under this section when quantifying the amount of compensation (if any) to be paid by the licensee in relation to that loss or damage.

51C Obligation to keep records of compliance

Obligation to keep records of compliance

(1) A licensee must keep records sufficient to enable the licensee's compliance with this Subdivision to be readily ascertained.

(2) The regulations may specify records that the licensee must keep as part of the obligation in subsection (1).

Offence

(3) A person commits an offence if:

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

(b) the person engages in conduct; and

(c) the conduct contravenes subsection (1).

Criminal penalty: 5 years imprisonment.

Subdivision D - Miscellaneous