National Consumer Credit Protection Act 2009

This section applies to a licensee who enters a low cost credit contract (the initial contract) with a consumer who will be the debtor under the contract.

The licensee may satisfy paragraphs 128(c) and (d) in relation to entering the initial contract by (respectively):

making an assessment that would satisfy paragraph 128(c) in relation to entering a larger contract with the consumer; and

making inquiries and verification that would satisfy paragraph 128(d) in relation to entering the larger contract with the consumer.

For larger contract, see subsection (7).

Subsection (4) applies if:

the licensee satisfies paragraphs 128(c) and (d) in relation to entering the initial contract by:

making an assessment (the initial assessment) that would satisfy paragraph 128(c) in relation to entering, with the consumer, a larger contract with a particular credit limit (the maximum credit limit); and

making inquiries and verification (the initial inquiries and verification) that would satisfy paragraph 128(d) in relation to entering the larger contract with the consumer; and

the initial assessment is an assessment that the larger contract will not be unsuitable for the consumer if the larger contract is entered in the period covered by the initial assessment.

If the licensee subsequently, within the protected period, makes a protected increase to the credit limit of the initial contract, then:

the licensee is taken to satisfy section 128 in relation to the protected increase (regardless of whether the initial assessment, and the initial inquiries and verification, were made within the period that applies in relation to the protected increase under that section); and

the initial assessment is taken to be:

an assessment that covers the protected period; and

an assessment that the initial contract will not be unsuitable for the consumer if the protected increase is made in the protected period.

For protected increase and protected period, see subsection (7).

Even if the licensee is taken under this subsection to satisfy section 128 in relation to the protected increase, it is still possible for the licensee to contravene subsection 131(1) or 133(1) in relation to the protected increase.

Subsection (4) does not apply to the licensee in relation to the protected increase if, at the time when the protected increase is made, the licensee has information on the basis of which it would be reasonable to conclude that the credit contract is likely to be unsuitable for the consumer if the protected increase is made.

Despite subsections (3) and (4):

the licensee may, at any time after making the initial assessment and before making the protected increase, make a new assessment in relation to the protected increase for the purposes of paragraph 128(c); and

if the licensee does so, then subsection (4) of this section does not apply to the licensee in relation to the protected increase.

In this section:

has a credit limit that is greater than the credit limit of the initial contract when the initial contract is entered; and

has terms that are otherwise substantially the same as the terms of the initial contract when the initial contract is entered.

after the increase, the initial contract has a credit limit that is no greater than the maximum credit limit (within the meaning of subparagraph (3)(a)(i)); and

the terms of the initial contract after the increase are otherwise substantially the same as the terms of the initial contract immediately before the increase.

the period covered by the initial assessment;

the period of 2 years beginning when the period covered by the initial assessment begins.