National Consumer Credit Protection Bill: new concepts

Besides introducing credit licensing, the draft National Consumer Credit Protection Bill 2009 introduces a number of new concepts and procedures into the consumer credit regime including the following:

  • the "capacity to pay" test for credit assessment will be expanded by a test of whether the credit contract will be unsuitable for the borrower before entering the contract or increasing a loan;
  • "unsuitability" means if it will be likely, at the time the loan is made, the borrower could not comply (and repay) without hardship or the credit doesn’t meet the borrower’s objectives;
  • the Bill specifies what is reasonable for a credit provider to do in making the unsuitability assessment ;
  • the credit provider must give the borrower a copy of the assessment if requested within two business days if requested any time up to 12 months after the contract expires. There is no obligation to provide a copy of the assessment if the credit contract is not entered into or the credit limit is not increased;
  • credit providers must give a person a credit guide , as soon as practicable after it becomes apparent that the credit provider is likely to enter a credit contract with a person who will be the borrower under the contract;
  • the credit provider must give written notice of the outcome of an application for a hardship change within 21 days after receiving the application. If the application is refused, the notice must state the credit provider’s EDR and the applicant's’s rights under that scheme;
  • The first time a default occurs in payment pursuant to a direct debit authority, the credit provider must give a notice in the prescribed form to the borrower and any guarantor within 10 days of the default occurring.
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