National Consumer Credit Protection Act 2009

There is a reportable situation in relation to a licensee if one of the following paragraphs is satisfied:

the licensee or a representative of the licensee has breached a core obligation and the breach is significant;

the licensee or a representative of the licensee is no longer able to comply with a core obligation and the breach, if it occurs, will be significant;

the licensee or a representative of the licensee conducts an investigation into whether there is a reportable situation of the kind mentioned in paragraph (a) or (b) and the investigation continues for more than 30 days;

an investigation described in paragraph (c) discloses that there is no reportable situation of the kind mentioned in paragraph (a) or (b).

There is also a reportable situation in relation to a licensee if:

in the course of engaging in a credit activity, the licensee or a representative of the licensee has engaged in conduct constituting gross negligence; or

the licensee or a representative of the licensee has committed serious fraud; or

any other circumstances prescribed by the regulations for the purposes of this paragraph exist.

Each of the following is a core obligation:

an obligation under section 47, other than the obligation under paragraph 47(1)(d);

the obligation under paragraph 47(1)(d), so far as it relates to this Act, the Transitional Act and Division 2 of Part 2 of the ASIC Act and regulations made for the purpose of that Division;

the obligation under paragraph 47(1)(d), so far as it relates to Commonwealth legislation that is:

covered by paragraph (d) of the definition of credit legislation in subsection 5(1); and

specified in regulations made for the purposes of this subparagraph;

an obligation of a representative of the licensee under this Act, the Transitional Act, Division 2 of Part 2 of the ASIC Act or regulations made for the purpose of that Division.

For the purposes of this section, a breach of a core obligation is taken to be significant if:

the breach is constituted by the commission of an offence under any law and the commission of the offence is punishable on conviction by a penalty that may include imprisonment for a maximum period of:

if the offence involves dishonesty—3 months or more; or

in any other case—12 months or more; or

the breach is constituted by a contravention of a civil penalty provision under any law, other than a civil penalty provision prescribed by the regulations for the purposes of this paragraph; or

the breach is constituted by a contravention of a key requirement (as defined for the purposes of the National Credit Code), other than a key requirement prescribed by the regulations for the purposes of this paragraph; or

the breach is constituted by a contravention of subsection 12DA(1) of the ASIC Act (misleading or deceptive conduct in relation to a financial service); or

the breach results, or is likely to result, in material loss or damage to a credit activity client of the licensee; or

any other circumstances prescribed by the regulations for the purposes of this paragraph exist.

Otherwise, for the purposes of this section, a breach of a core obligation is significant having regard to the following:

the number or frequency of similar breaches;

the impact of the breach on the licensee’s ability to engage in credit activities covered by the licence;

the extent to which the breach indicates that the licensee’s arrangements to ensure compliance with those obligations are inadequate;

any other matters prescribed by regulations made for the purposes of this paragraph.

Regulations for the purposes of paragraph (4)(b) may prescribe a civil penalty provision to the extent that it relates to the following:

contraventions of specified provisions;

specified matters.

For the purposes of this section, a person is a credit activity client of a licensee if the person is a consumer who:

is a party to a credit contract, or will be a party to a proposed credit contract, in relation to which the licensee, or a representative of the licensee, performs the obligations, or exercises the rights, of a credit provider; or

is a person to whom the licensee, or a representative of the licensee, provides a credit service; or

is a party to a consumer lease, or will be a party to a proposed consumer lease, in relation to which the licensee, or a representative of the licensee, performs the obligations, or exercises the rights, of a lessor; or

is a mortgagor under a mortgage, or will be the mortgagor under a proposed mortgage, in relation to which the licensee, or a representative of the licensee, performs the obligations, or exercises the rights of a mortgagee; or

is the guarantor under a guarantee, or will be the guarantor under a proposed guarantee, in relation to which the licensee, or a representative of the licensee, performs the obligations, or exercises the rights, of a beneficiary under the guarantee; or

is a person in relation to whom the licensee, or a representative of the licensee, engages in a prescribed activity mentioned in item 6 of the table in subsection 6(1).