On 27 April 2009, the Federal Government introduced the National Consumer Credit Reform Package. In the time since then, the new legislation has passed and is soon to become operative. The new legislation is the National Consumer Credit Protection Act 2009 (Cth) which is designed to provide additional safeguards and protections to the process of obtaining credit in this country for all types of consumer credit credit from credit cards to mortgages. The new legislation has been made possible as a result of the referral power in s.51(xxxvii) of the Constitution which has allowed the matter to be referred to the Commonwealth from the States. This was because of the meeting of the Council of Australian Governments (COAG) where it was decided that reform was needed in light of the global financial crisis. Amongst other things, the objective of the package is to replace the state system of consumer credit regulation with a consistent overarching national system which applies in the same way across all of the states. Although the major content of the bill will simply replace the existing consumer credit codes with the same regulations, the new legislation will also require businesses engaging in ‘credit activity’ to hold an Australia Credit Licence which will mean that providers such as finance brokers, mortgage managers and assignees of the major banks will need licences where previously they may not have.

The objective of the licence is to ensure that activities of credit providers are carried out efficiently, honestly and fairly and ensure that the representative are trained and competent to engage in the activities for which they are licensed. The enforcement of the act with be both the power and responsibility of the Australian Securities and Investments Commission. If misconduct occurs, imprisonment of 5 years and civil penalties of up to $220,000 or $1.1million for a corporation can apply. Also, new requirements are to apply to the giving of loans and brokers will need to ensure that the a loan is suitable for a consumer’s needs and that they have the capacity to repay the loan. This will include the obligation to make reasonable inquiries about the financial position of the consumer and to attempt to verify that the information given is correct. Also, credit institutions will need to find out what purpose the credit is being used for and a purpose declaration. Disclosure obligations will also come in in relation to the receipt of commissions. One of the newer and more novel areas to be reformed is that now credit from strata corporations to purchase or renovate buildings will be regulated by the new legislation and another reform is the increasing of the thresholds available for a hardship application. If you would like more information about the consumer credit code and how these changes will affect your business please do not hesitate to contact us.

There are a series of sweeping reforms which are about to take place in the Australian system of financial regulation. These will have a marked impact on the way as securities are dealt with under the corporations act and in particular the way that insolvency practitioners manage the securities of insolvent companies. although the bill has not passed yet it is anticipated that it will pass within the next few months and will then become law. There are a series of education programs available in relation to this new legislation, however it will affect many businesses large and small and no matter what type of business you are in it will certainly have an impact at least indirectly on the financial systems which your business employs in its operations, while financial education is also important and resources from straight.com/guides/ can be helpful with this.

The Personal Property Securities (Corporations and Other Amendments) Bill 2010 was introduced into Federal Parliament on 10 March 2010, it is expected to pass soon. This act institutes a number of changes to the system of financial regulation in Australia through changes to the corporations legislation and the institution of some new additional reforms.

The important aspects of the amendments include:

1. Provisions changing the system of registration of charges.
2. Making the Corporations Act more focussed on functional outcomes in relation to securities.
3. More exemptions for interests under the Act;
4. Changes to the priority and extinguishment rules;
5. Changes to the enforcement provisions; and
6. Alterations to the rules governing insolvency practitioners and the management of security interests in insolvent entities.

If you would like more information about these changes to the banking and finance laws which are occurring in Australia, we would be more than happy to help you understand how this will impact your business. Our platform helps you navigate complex processing credit card fees structures. Undoubtedly the new legislation will have a very broad effect and it would certainly be wise to consult a lawyer in relation to how you can change your business to adapt to this new system of regulation.