Credit and Debt

Credit and Debt

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Australia’s consumer law regime

Australian Consumer Law (ACL)

The ACL commenced fully on 1 January 2011. This regime replaced the various Federal, State and Territory consumer and fair trade laws, including:

  • Trade Practices Act 1974 (Cth) (TPA) (which has been renamed the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act)); and
  • Fair Trading Act 1999 (Vic) (FTA) (which was repealed on 1 July 2012).

The ACL is Schedule 2 to the Competition and Consumer Act. It introduces nationally consistent rules for business and trading practices, including the regulation of consumer contracts. The Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) has been amended for consistency with the ACL in relation to financial products and services, with the Australian Securities and Investments Commission (ASIC) continuing as the national regulator of these services.

The ACL has force of law in Victoria by virtue of s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

New consumer credit regime

The National Consumer Credit Protection Act 2009 (Cth) (National Credit Act) commenced on 1 July 2010. This Act means that the Commonwealth (not the States and Territories as was previously the case), regulates consumer credit in Australia.

The National Credit Code (Code) is at Schedule 1 to the National Credit Act. The Code replaces the Uniform Consumer Credit Code (UCCC), which was enacted under the Consumer Credit (Victoria) Act 1995 (Vic) (Victorian Credit Act). The Victorian Credit Act continues to provide some additional protections to Victorians (i.e. further to those under the National Credit Act).

    Effects of the new legislation

    Australian Consumer Law

    The ACL only applies to consumer contracts entered into after 1 January 2011. The unfair contract terms provisions apply to consumer contracts entered into or renewed after 1 July 2010 or to terms in existing contracts that were varied after this date.

    Aspects of the ACL that are most relevant to our clients include:

    • new consumer rights for standard form contracts under the national unfair contract terms law (Chapter 2, Part 2-3);
    • a new national regime for unsolicited consumer agreements, which replaces existing State and Territory laws on door-to-door sales and other direct marketing (Chapter 3, Part 3-2, Division 2);
    • provisions relating to linked credit contracts, unconscionable conduct and specific marketing practices (such as making false and misleading misrepresentations); and
    • enforcement powers for the courts, the Australian Competition and Consumer Commission (ACCC), Consumer Affairs Victoria and the Australian Securities and Investments Commission.

    Refer to the ACL website for further information.

    Pre 1 July 2010 contracts

    With the exception of credit cards and lines of credit, only credit contracts entered into on or after 1 July 2010 are regulated by the National Credit Act and Code. Importantly, credit providers who were not willing or able to comply with the new requirements under the National Credit Act had the option to cease offering new credit contracts or consumer leases after 1 July 2010. These entities continue to be credit providers or lessors in relation to credit contracts entered into before 1 July 2010 (i.e. in relation to a contacts that were made and in force, and to which the UCCC applied, immediately before 1 July 2010).

    This category of credit providers is called "carried over instrument lenders". The Code applies to these lenders to the extent that its provisions correspond to provisions in the old UCCC. This means that you still reference the new regime when relying on protections available for pre-1 July 2010 contracts, but only those provisions that existed under the old regime will apply to those contracts (Schedule 1, Part 2, Division 2, section 3 of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth)).

    More detail about the specific rules that apply to carried over instrument lenders is contained in Chapter 2 of the National Credit Act.

    You need to be aware of the new laws and make sure research materials, authority and precedents you're using are not out of date.  In practice, many of the protections relevant to our clients remain the same.  Some of the key changes include:

    • an emphasis on consumer protection and responsible lending, including the requirement to provide Credit Guides and a prohibition on entering into "unsuitable contracts";
    • a positive licensing regime which requires all credit providers and entities that provide credit assistance to be licensed. Check the register of "credit licensees" on the ASIC website to see if the entity you are dealing with is a licensed entity (if it is not and it is providing credit or credit assistance, you should notify ASIC);
    • provisions making ASIC the regulatory body for consumer credit and giving it strengthened enforcement powers including imposing licence conditions, de-registration and issuing infringements;
    • an emphasis on low cost and less complex dispute resolution - under the National Credit Act, all licensees must be signed up to an ASIC-approved External Dispute Resolution scheme; and
    • VCAT no longer has jurisdiction regarding causes of action under the UCCC or the Code - disputes arising in Victoria under the new Code will have to be issued in either the Federal Court of Australia, the Federal Circuit Court, or the Supreme, County or Magistrates' Courts of Victoria.