Change to Timetable For Responsible Lending Reforms
In a move to head off predatory and irresponsible lending, the timetable for the application of some of the responsible lending provisions of the National Consumer Credit Protection Reforms has been brought forward.
The major changes will ensure that some brokers and lenders are caught by the obligation to ensure proposed credit is not unsuitable, carry out appropriate due diligence on their prospective borrowers and lend responsibly from 1 January 2010.
The new timetable does not apply to authorised deposit-taking institutions or registered finance corporation under the Financial Sector (Collection of Data) Act 2001.
Brokers and credit providers need to determine whether they are affected by this change in timetable and ensure systems and processes are in place to comply by 1 January 2010.
Other changes, for example those changes to the requirements of default notices, business purpose declarations and first debit default notices, contained in the National Credit Code have been pushed out to 1 July 2010 to permit lenders and others adequate time to ensure the changes are made to their paper and IT based disclosure systems.
A link to the minister’s media release is here.
The long awaited regulations for the reforms were also been released on 14 August 2009 as exposure drafts. These regulations provide important exemptions for certain licensing provisions. We will be reviewing the regulations
The new timetable, attached to the press release, is set out below.
| Implementation Requirements | In the Credit Bill (June 2009) | Under Revised Timeline (August 2009) |
|---|---|---|
| Requirement not to arrange or provide credit that is unsuitable – non-ADIs and non-RFCs | From 1/1/2011 | From 1/1/2010 |
| Requirement not to arrange or provide credit that is unsuitable – ADIs and RFCs | From 1/1/2011 | From 1/1/2011 (unchanged) |
| Other responsible lending obligations (including disclosure requirements, such as upfront disclosure of broker fees and charges) | From 1/1/2011 | From 1/1/2011 (unchanged) |
|
New NCC Requirements:
|
From 1/1/2010 |
Current State Code requirements replicated in the NCC from 1 January 2010. New NCC requirements from 1 July 2010. |
Please call to discuss how these changes may affect your business.