The National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011 has been passed, with amendments, by both Houses and is awaiting Royal Assent. [UPDATE: Royal Assent given on 25 July 2011]
The changes will be made by making additional rules that apply to credit licensees that are credit providers under credit card contracts and standard home loans.
The key facts sheet requirement for standard home loans will now commence on 1 January 2012 and the credit card provisions will commence on 1 July 2012.
Credit card changes
The changes will:
•insert new restrictions on a licensee approving the use of a credit card in excess of the credit limit for the credit card contract.
•require credit card providers to allocate repayments to higher interest debts first.
•prohibit a licensee making a credit limit increase invitation unless expressly consented to by the consumer, subject to a transitional provision.
•require a consumer is provided with, or given access to, a Key Facts Sheet before entering into a credit card contract. If a consumer applies to a licensee for a credit card contract under which the licensee would be the credit provider, the licensee must not enter into, or offer to enter into, the contract unless the application is made using an application form that includes a Key Facts Sheet for the contract that contains up-to-date information. But entry by a licensee into a contract without an up-to-date Credit Card Key Facts Sheet having been provided to the borrower will not be a strict liability offence.
Lenders will be permitted to seek and obtain consents from consumers to receive credit limit increase invitations prior to 1 July 2012 so they can rely on those consents for the purpose of making an unsolicited credit limit offer after commencement.
The consumer may withdraw the consent at any time.
A licensee must keep a record of consents the licensee obtains and withdrawals of such consents.
The Bill provides for Regulations to require a licensee who is the credit provider under a credit card contract to notify the consumer who is the debtor under the contract if the licensee becomes aware that the debtor has used a credit card that is linked to the contract to obtain cash, goods or services in excess of the credit limit for the contract.
If a credit card is used to obtain cash, goods or services in excess of the credit limit for the credit card contract, the licensee who is the credit provider under the contract is prohibited from imposing any liability to pay fees or charges, or a higher rate of interest, on the consumer who is the debtor under the contract because the credit limit was exceeded unless:
(a) the licensee has obtained express consent from the consumer covering the imposition of the fees or charges, or the higher rate of interest; and
(b) the consent has not been withdrawn.
Standard Home Loans
A standard home loan of a licensee is a standard form of credit contract under which the licensee provides credit to purchase residential property or to refinance credit that has been provided wholly or predominantly to purchase residential property.
It will be mandatory for standard home loan borrowers to be provided with, or given access to, a Key Facts Sheet whether the application is made on a website or otherwise.
It will not be a strict liability offence if a licensee does not have a website that allows a consumer to generate a Home Loan Key Facts Sheet.