National Consumer Credit Protection Act 2009

This section applies to a licensee who:

enters a low cost credit contract with a consumer who will be the debtor under the contract; or

increases the credit limit of a low cost credit contract with a consumer who is the debtor under the contract.

The licensee must also have elected under subsection 133BXA(1) that this Part apply to the licensee in relation to the low cost credit contract: see subsection 133BXA(2).

In determining whether the licensee has:

made reasonable inquiries about the consumer’s requirements and objectives in relation to the low cost credit contract, as required under paragraph 130(1)(a); and

made reasonable inquiries about the consumer’s financial situation, as required under paragraph 130(1)(b); and

taken reasonable steps to verify the consumer’s financial situation, as required under paragraph 130(1)(c);

Regulations made for the purposes of subsection 130(2) may prescribe particular inquiries or steps that must be made or taken, or that do not need to be made or taken, for the purposes of paragraph 130(1)(a), (b) or (c).

The matters covered by this subsection are the following:

the nature of the low cost credit contract (including the terms of the contract and the type and amount of credit provided under the contract);

if there is a target market determination (within the meaning of the Corporations Act 2001) for the low cost credit contract—the nature of the target market for the low cost credit contract, as described in that determination;

whether the consumer is financially vulnerable;

whether the licensee has any procedures in place to reduce the risk of the licensee providing credit to a consumer on terms that are not affordable for the consumer;

whether the licensee has any procedures in place to mitigate the harm that may be caused to a consumer if the licensee provides credit to the consumer on terms that are not affordable for the consumer;

any matters prescribed by the regulations.

The particular things that a licensee must do in order to satisfy the licensee’s obligations under paragraphs 130(1)(a) to (c) in relation to low cost credit contracts may vary from case to case, and may be less onerous in some cases than in others, depending on matters such as those covered by this subsection.