The National Consumer Credit Protection Amendment Regulations 2011 (No.5) were registered on 5 September 2011.
The Regulations set out the operational detail of the home loan provisions in the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011 which commences on 1 January 2012.
The Act requires lenders to provide consumers with personalised Key Facts Sheets for home loans.
What home loans require a Key Facts Sheet?
Section 133AA(1) of the Act defines a standard home loan of a licensee as a standard form of credit contract under which the licensee provides credit:
(a) to purchase residential property; or
(b) to refinance credit that has been provided wholly or predominantly to purchase residential property.
Regulation 28LA prescribes that a standard form of credit contract is a contract for a home loan that obliges the consumer to make repayments that repay principal and interest for the full term of the home loan with one of the following types of interest rates:
- Variable rate home loan:The interest rate on the entire loan balance may vary at the lender’s discretion
- Fixed rate home loan: The interest rate on the entire loan balance is fixed for the whole or part of the loan
Interest only loans and “split loans” are not covered.
The form and content of the Home Loan Key Facts Sheet
Part 1 of Schedule 5 of the Regulations sets out the form of the key facts sheet for a standard home loan and Part 2 sets out the requirements for how the information in a key facts sheet is to be prepared for a particular consumer and loan.
Regulation 28LB also requires that a Key Facts Sheet that is given to a consumer or published online must meet the following requirements:
(a) the Key Facts Sheet must be in A4 size;
(b) all text in the Key Facts Sheet must be black on a white background, unless otherwise specified in the regulation;
(c) the text, except the heading, in the ‘Description of this home loan’ box must be black on a light blue background;
(d) the headings to all boxes must be white on a blue background;
(e) all other headings must be blue on a white background.
However, if a lender is not able to print the Key Facts Sheet using a colour printer, the lender may print a Key Facts Sheet in black and white.
The Key Facts Sheet requires disclosure of a “personalised comparison rate”
The Key Facts Sheet notes require that this rate “must be calculated in accordance with the formula in subregulation 100 (3) but using the designated amounts provided by the consumer under sections 133AC and 133AD of the Act. This rate includes each fee or charge (if any) payable by the debtor at the time each repayment is made, being a credit fee or charge (other than a government fee, charge or duty) that is ascertainable when the comparison rate is disclosed (whether or not the credit fee or charge is payable if the credit is not provided). The tolerances in subregulations 100 (4), (5) and (6) also apply to this rate.”
Where is the Key Facts Sheet to be provided?
If a licensee has a website that can be used by a consumer to apply for, or make an inquiry about, one or more standard home loans of the licensee, the licensee must ensure that the website:
(a) tells the consumer that the consumer may use the website to generate a Key Facts Sheet for the standard home loan, or for each of the standard home loans;
(b) (i) tells the consumer what information the consumer will need to enter in order to generate the Key Facts Sheet or Sheets; and
(ii) provides the consumer with instructions on how to generate the Key Facts Sheet or Sheets;
(c) if the consumer enters the information and follows those instructions, the consumer can use the website to generate the Key Facts Sheet or Sheets, containing up‑to‑date information, in a form that can be printed.
The lender must also provide a Key Facts Sheet if a consumer makes a request to a licensee, otherv than through a website eg in person or through a call centre.
Can the Key Facts Sheet be used for other types of loans?
A lender may produce a Key Facts Sheet for home loans if Part 3-2A of the Credit Act does not require the lender to provide a Key Facts Sheet but it must omit any reference to the production of the Key Facts Sheet being an Australian Government requirement.