The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has introduced the Government's national consumer credit laws into Parliament.
The regime will establish a single, standard, national law for the regulation of consumer credit.
The new national regime includes:
- a national licensing regime regulating credit providers and providers of credit related services enforced by the Australian Securities Commission (ASIC) as the sole regulator (from 1 January 2010);
- responsible lending requirements (from 1 January 2011);
- compulsory dispute resolution mechanisms for credit providers;
- extension of consumer credit laws to residential investment property loans;
- an increase to the threshold for hardship claims to $500,000.
The Reform Package comprises three Bills:
- the National Consumer Credit Protection Bill 2009 (Credit Bill) which contains the licensing provisions and new National Credit Code (replacing the existing Consumer Credit Code);
- the National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009 (Transitional Bill); and
- the National Consumer Credit Protection (Fees) Bill 2009 (Fees Bill).
Subject to the passage of the Reform Package and reference legislation in each state, the Reform package will commence on 1 November 2009:
- Lenders and credit-service providers (such as brokers) will be required to register with ASIC between 1 November 2009 and 31 December 2009, and will have to apply for a licence by 30 June 2010 in order to continue to engage in credit activities.
- The responsible lending conduct obligations will commence on 1 January 2011 to provide industry time to put in place the systems, arrangements and training needed to comply with these obligations.