National Consumer Credit Protection Bill penalties

The National Consumer Credit Protection Bill penalty framework is an issue that has attracted a lot of discussion.

Civil and criminal penalties
Civil penalty offences attract a maximum penalty of 2,000 penalty units on all civil penalties. This amounts to a maximum of $220,000 for individuals and $1,100,000 for corporations, partnerships or multiple trustees [Part 4-1, Division 2, paragraph 167(3)(b)]. A ‘penalty unit‘ has the meaning given by section 4AA of the Crimes Act 1914, currently $110 (corporations, partnerships or multiple trustees are liable for 5 times the maximum number of penalty units payable by individuals).

ASIC can only seek a declaration and pecuniary penalty order within six years of a person contravening the provision.

Civil penalties are separate from criminal penalties (eg fine or jail) and consumer remedies (eg compensation for loss, variation of the credit contract or damage or injunctions).

For example, section 133 imposes a maximum 2 years imprisonment for breaching the prohibition on entering, or increasing the credit limit of, unsuitable credit contracts in addition to a monetary penalty.

Other criminal offences (eg involving failure to keep financial records, relating to trust accounts or concealing documents or misleading information) have a maximum imprisonment of 5 years.

A criminal offence could lead to a person being disqualified from managing or being a director of a company.

Suspension or cancellation of credit licence
Amongst other reasons, a breach of the licence conduct obligations could lead to suspension or cancellation of the credit licence.(s56)

If the licensee is an ADI, ASIC would need to consult with APRA first.

Other remedies
ASIC may seek an adverse publicity order against a person who has contravened or committed an offence against the Credit Bill. Under a publicity order, a court may require a person to disclose certain information in a specified way and to publish the information at their own expense. [Part 4-2, Division 2, section 182]

Infringement notices
Section 331 allows regulations to be made for infringement notices to be issued to persons alleged to have committed:
• strict liability; or
• civil penalty contraventions as provided in the regulations.

This allows ASIC to deal with suspected minor offenders without the need to summons a person to appear in court.

In relation to strict liability offences, the maximum fine must not exceed one-fifth of the maximum penalty that a court could impose on the person for that offence. In relation to civil penalties, the maximum fine must not exceed one-twentieth of the maximum penalty.

It is expected these will apply to responsible lending offences.

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