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This Act is the Financial Sector Reform Act 2022.
Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information | ||
|---|---|---|
Column 1 | Column 2 | Column 3 |
Provisions | Commencement | Date/Details |
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day after this Act receives the Royal Assent. | 13 December 2022 |
6. Schedule 4, Parts 1 and 2 | The day after the end of the period of 6 months beginning on the day this Act receives the Royal Assent. | 12 June 2023 |
7. Schedule 4, Part 3 | The seventh day after this Act receives the Royal Assent. | 19 December 2022 |
8. Schedule 4, Part 4 | The day after this Act receives the Royal Assent. | 13 December 2022 |
9. Schedule 4, Parts 5 and 6 | The day after the end of the period of 6 months beginning on the day this Act receives the Royal Assent. | 12 June 2023 |
10. Schedule 4, Part 7 | The day after this Act receives the Royal Assent. | 13 December 2022 |
This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 4—Consumer credit reforms
Part 1—Small amount credit contracts
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
repayment date: see subsection 133CD(3).
unsolicited communication to a consumer: see subsection 133CF(2).
2 Section 111 (paragraph beginning “Division 7”)
Repeal the paragraph, substitute:
Division 7 prohibits a licensee from providing credit assistance to a consumer in relation to short‑term credit contracts, and imposes requirements on a licensee who makes representations about providing credit assistance in relation to small amount credit contracts. It also imposes requirements in relation to recording the preliminary assessment that a small amount credit contract is not unsuitable.
3 Subsection 117(1A)
Omit “obtain and consider account statements that cover”, substitute “obtain and consider information about each transaction on the account, and the balances of the account, during”.
4 Subsection 118(3A)
Repeal the subsection.
5 Subsection 123(3A)
Repeal the subsection.
6 Section 124B
Repeal the section, substitute:
Requirement
If a licensee represents that the licensee provides, or is able to provide, credit assistance to consumers in relation to small amount credit contracts, the licensee must:
display information; and
give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
the information that the licensees must display;
how the licensees must display the information;
when the licensees must display the information;
the information that the licensees must give to consumers;
how the licensees must give the information to consumers;
when the licensees must give the information to consumers.
In making the determination under subsection (2), ASIC must take into account the risks associated with small amount credit contracts and the alternatives that may be available to consumers.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
If, in a preliminary assessment made for the purposes of paragraph 115(1)(c) or (2)(a), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before providing credit assistance to the consumer by:
suggesting that the consumer apply, or assisting the consumer to apply, for the small amount credit contract; or
suggesting that the consumer apply, or assisting the consumer to apply, for the increase to the credit limit of the small amount credit contract which is the subject of that preliminary assessment; or
suggesting that the consumer remain in the small amount credit contract;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
the preliminary assessment; and
the inquiries and verification made for the purposes of paragraph 115(1)(d) or (2)(b) in relation to that preliminary assessment.
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(d) and (e) are to be documented in writing.
Before making a determination under subsection (2), ASIC must:
consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
have regard to any submissions made by the Information Commissioner because of that consultation.
7 Subsection 130(1A)
Omit “obtain and consider account statements that cover”, substitute “obtain and consider information about each transaction on the account, and the balances of the account, during”.
8 Subsection 131(3A)
Repeal the subsection.
9 Subsection 133(3A)
Repeal the subsection.
10 Section 133C (paragraph beginning “Division 2”)
Repeal the paragraph, substitute:
Division 2 prohibits a licensee from entering into, or increasing the credit limit of, short‑term credit contracts. It also imposes requirements on a licensee who makes representations about entering into small amount credit contracts and prohibits a licensee from entering into, or offering to enter into, small amount credit contracts in certain circumstances. Division 2 imposes requirements in relation to recording the assessment that a small amount credit contract is not unsuitable and prohibits a licensee from making certain unsolicited communications in relation to small amount credit contracts. It also provides that the consumer is not liable to pay certain fees and charges under small amount credit contracts in certain circumstances.
11 Section 133CB
Repeal the section, substitute:
Requirement
If a licensee represents that the licensee enters into, or is able to enter into, small amount credit contracts with consumers under which the licensee would be the credit provider, the licensee must:
display information; and
give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
the information that the licensees must display;
how the licensees must display the information;
when the licensees must display the information;
the information that the licensees must give to consumers;
how the licensees must give the information to consumers;
when the licensees must give the information to consumers.
In making a determination under subsection (2), ASIC must take into account the risks associated with small amount credit contracts and the alternatives that may be available to consumers.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
12 Subsection 133CC(1)
Repeal the subsection (not including the heading), substitute:
A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if the repayments that would be required under the contract would not meet the requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
For example, the regulations may provide that the amount of a repayment must not exceed a specified percentage of the consumer’s income.
13 At the end of section 133CC
Add:
Loss of certain fees and charges
If a licensee enters into a small amount credit contract in contravention of subsection (1), then:
the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of a kind mentioned in paragraph 31A(1)(a), (b), (c) or (d) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
the consumer may recover as a debt due to the consumer any amounts paid by the consumer that, in accordance with paragraph (a) of this subsection, the consumer is not liable to pay (or is taken never to have been liable to pay).
14 At the end of Division 2 of Part 3‑2C
Add:
Requirement
A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if any of the following applies:
repayments that would be required under the contract are not equal;
the intervals between repayment dates would not be equal;
the interval between the date on which credit would be first provided under the contract and the first repayment date would be longer than twice the interval between the first repayment date and the second repayment date.
Civil penalty: 5,000 penalty units.
For the purposes of paragraph (1)(a), repayments that would be required under a small amount credit contract are taken to be equal if:
each repayment is of the same amount; or
both of the following apply:
each repayment (other than the last repayment) is the same amount;
the last repayment is up to 5% less than each other repayment; or
the repayments meet the conditions determined by ASIC under subsection (5).
A repayment date in relation to a small amount credit contract is the date on or by which a repayment is required to be made under the contract.
For the purposes of paragraph (1)(b), if a small amount credit contract provides that:
repayments that would be required under the contract are to be made on or by a fixed day of each week, fortnight or month; and
if that fixed day falls on a day that is not a business day—the repayment would be required to be made on or by the immediately preceding or succeeding business day;
the intervals between repayment dates are taken to be equal.
ASIC may, by legislative instrument, determine conditions for the purposes of paragraph (2)(c).
Nothing in this section is intended to limit the regulations which may be made for the purposes of section 133CC.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
Strict liability offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 10 penalty units.
Subsection (8) is an offence of strict liability.
If, in an assessment made for the purposes of paragraph 128(c), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before:
entering into the small amount credit contract with the consumer; or
making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter into the small amount credit contract with the licensee; or
increasing the credit limit of the small amount credit contract which is the subject of that assessment; or
making an unconditional representation to the consumer that the licensee considers that the credit limit of the small amount credit contract between the consumer and the licensee will be able to be increased;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
the assessment; and
the inquiries and verification made for the purposes of paragraph 128(d) in relation to that assessment.
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(e) and (f) are to be documented in writing.
Before making a determination under subsection (2), ASIC must:
consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
have regard to any submissions made by the Information Commissioner because of that consultation.
Prohibition on certain unsolicited communications
A licensee must not make, or arrange for the making of, an unsolicited communication to a consumer (whether orally, in writing or by electronic means) that contains:
an offer to the consumer to enter into a small amount credit contract; or
an invitation to the consumer to apply for a small amount credit contract;
if any of the following apply:
the consumer is, or has at any time been, a debtor under a small amount credit contract with the licensee;
the consumer has at any time applied for a small amount credit contract with the licensee;
the consumer:
is, or has at any time been, a debtor under a small amount credit contract with another credit provider; or
has at any time applied for a small amount credit contract with another credit provider;
and a reasonable person in the licensee’s position would, if the person undertook such inquiries as are reasonable in the circumstances, be aware of the matter in subparagraph (i) or (ii) (whichever applies).
Civil penalty: 5,000 penalty units.
Meaning of unsolicited communication to a consumer
An unsolicited communication to a consumer is a communication to a consumer or a consumer’s agent that is made by a person by dealing directly with the consumer or the consumer’s agent in any of the following circumstances:
no prior request has been made by the consumer to the licensee for that communication;
the consumer has made a prior request to the licensee for that communication and that request was solicited by or on behalf of the licensee;
circumstances of a kind prescribed by the regulations.
However, the regulations may prescribe that specified kinds of communications are not unsolicited communications to which this section applies.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
Loss of certain fees and charges
If:
a licensee makes an unsolicited communication to a consumer in contravention of subsection (1); and
the licensee enters into a small amount credit contract with that consumer within 30 days after that unsolicited communication is made;
then:
the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of a kind mentioned in paragraph 31A(1)(a), (b), (c) or (d) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
the consumer may recover as a debt due to the consumer any amounts paid by the consumer that, in accordance with paragraph (c) of this subsection, the consumer is not liable to pay (or is taken never to have been liable to pay).
15 After section 31B of the National Credit Code
Insert:
Requirement
A credit provider must not require or accept payment by the debtor under a small amount credit contract of an unexpired monthly fee.
A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
An unexpired monthly fee in relation to a small amount credit contract is each permitted monthly fee that is in respect of a month that commences after the date on which the contract is paid out.
If a credit provider contravenes subsection (1) in relation to a small amount credit contract:
the debtor is not liable (and is taken never to have been liable) to make the payment of the unexpired monthly fee to the credit provider; and
the debtor may recover as a debt due to the debtor the amount of any payment of the unexpired monthly fee made by the debtor to the credit provider.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
Strict liability offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 10 penalty units.
Subsection (5) is an offence of strict liability.
16 Subsection 72(3) of the National Credit Code (paragraph (a) of the note)
After “such as”, insert “family violence,”.
17 Paragraph 82(2)(b) of the National Credit Code
Repeal the paragraph, substitute:
either:
for a credit contract that is not a small amount credit contract—the interest charges and all other fees and charges payable by the debtor to the credit provider up to the date of termination; or
for a small amount credit contract—all fees and charges payable by the debtor to the credit provider up to the date of termination, excluding any unexpired monthly fee;
18 After paragraph 111(1)(i) of the National Credit Code
Insert:
section 31C;
19 Subsection 204(1) of the National Credit Code
Insert:
unexpired monthly fee: see subsection 31C(2).
Part 2—Consumer leases
National Consumer Credit Protection Act 2009
20 Subsection 5(1)
Insert:
consumer lease for household goods has the same meaning as in section 204 of the National Credit Code.
household goods has the same meaning as in section 204 of the National Credit Code.
21 At the end of section 134
Add:
Division 7 imposes requirements on a licensee who makes representations about providing credit assistance in relation to consumer leases for household goods. It also imposes requirements in relation to recording the preliminary assessment that a consumer lease is not unsuitable.
22 After subsection 140(1)
Insert:
If:
the consumer lease is a consumer lease for household goods; and
the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 138(1)(d), obtain and consider information about each transaction on the account, and the balances of the account, during at least the immediately preceding period of 90 days.
Subsection (1A) does not limit paragraph (1)(c).
23 At the end of Part 3‑3
Add:
Requirement
If a licensee represents that the licensee provides, or is able to provide, credit assistance to consumers in relation to consumer leases for household goods, the licensee must:
display information; and
give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
the information that the licensees must display;
how the licensees must display the information;
when the licensees must display the information;
the information that the licensees must give to consumers;
how the licensees must give the information to consumers;
when the licensees must give the information to consumers.
In making a determination under subsection (2), ASIC must take into account the risks associated with consumer leases for household goods and the alternatives that may be available to consumers.
Offence
A person commits an offence if:
the person is subject to a requirement under subsection (1); and
the person engages in conduct; and
the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
If, in a preliminary assessment made for the purposes of paragraph 138(1)(c) or (2)(a), the licensee assesses that a consumer lease for household goods is not unsuitable for a consumer, before providing credit assistance to the consumer by:
suggesting that the consumer apply for a particular consumer lease with a particular lessor; or
assisting the consumer to apply for a particular consumer lease with a particular lessor; or
suggesting that the consumer remain in a particular consumer lease with a particular lessor;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
the preliminary assessment; and
the inquiries and verification made for the purposes of paragraph 138(1)(d) or (2)(b) in relation to that preliminary assessment.
Civil penalty: 5,000 penalty units.
ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(d) and (e) are to be documented in writing.
Before making a determination under subsection (2), ASIC must:
consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
have regard to any submissions made by the Information Commissioner because of that consultation.
24 At the end of section 148
Add:
Division 5 prohibits a licensee from entering into, or offering to enter into, a consumer lease for household goods in certain circumstances and imposes requirements on a licensee who makes representations about consumer leases for household goods. It also imposes requirements in relation to recording an assessment that a consumer lease is not unsuitable.
25 After subsection 153(1)
Insert:
If:
the consumer lease is a consumer lease for household goods; and
the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 151(d), obtain and consider information about each transaction on the account, and the balances of the account, during at least the immediately preceding period of 90 days.
Subsection (1A) does not limit paragraph (1)(c).
26 At the end of Part 3‑4
Add: