Treasury has released an exposure draft of the National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 for consultation.

UPDATE: National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 registered.

If registered, the regulations will require debt management firms to hold an Australian Credit License when they are paid to represent consumers on matters related to credit activities.

The Regulations provide for licensing by 1 July 2021. People will need to have applied for an ACL and become a member of AFCA by 1 July 2021, in order to provide debt management services from that date.

Regulation 4B defines debt management assistance as being where a person, by dealing directly with the consumer or the consumer’s agent in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person:

• suggests that the consumer apply, or, assists the consumer to apply for:
  • a change to the credit contract for which the consumer is the debtor; or
  • a deferral or waiver of an amount under a credit contract for which the consumer is the debtor; or
  • a postponement relating to a credit contract for which the consumer is the debtor; or
• suggests that the consumer, or, assists the consumer:
  • make a complaint or claim to the credit provider, AFCA, ASIC or the Information Commissioner, in relation to a credit contract for which the consumer is the debtor; or
  • give a hardship notice (within the meaning of the Code) to the credit provider under a credit contract for which the consumer is the debtor; or
  • institute proceedings or take any other action in relation to a credit contract for which the consumer is the debtor.

It does not matter whether the person does so on the person’s own behalf or on behalf of another person. People will not be able to avoid the obligation through the use of disclaimers noting that they are not ‘suggesting’ a particular course of action.

Subregulation 4B(2) provides that a person does not provide ‘debt management assistance’ unless a fee, charge or other amount is paid or payable by or on behalf of the consumer in relation to the assistance. For the purposes of subregulation 4B(2), it is immaterial if the fee, charge or other amount is paid or payable to the provider of the assistance or to any other person.

There are limited exemptions for lawyers.

If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.