What is the general issue around credit?
ASIC Review review of credit cards reveals…
More than 1 in 6 Australians are struggling with credit card debt. Many of these are older Australians
Why are older Australians struggling with credit card debt?
They have fixed incomes such as through old age pensions. They use credit cards to pay for neccessities. Cost of living can also make it worse
According to the National Consumer Credit Protection Act 2009, what must lenders do in regards to credit cards?
Adminstered by ASIC
- Lender must assess whether the applicant can repay the credit card increases within 3 years if they want an increase
- Providers can not backdate interest on an interest free period
- Must state how long it would take to pay off debt if only the minimum payment is paid monthly
What are examples of harship provisions?
Freezing interest payments or requiring the principal amount to be paid with no interest
What is the aim of the Credit Protection Act?
Admistered by ASIC
Provide laws that apply with equal force to all forms of consumer lending and to all credit providers, and which are consistent across all jurisdictions in Australia.
What does the NCCPA 2009 do?
- Gurantees standardisation
- Requires credit information to be provided in a format that is clear and understandable
What are advantages of NCCP?
- Credit obligations are transparent to all parties. Clear obligations increase consumer confidence. Debtors know their contract is supported by national legislation
- Gives more freedom to credit providers around setting fees, as long as they are disclosed
- Provides variation of repayment types in case of hardship
- All credit agreements must be done through writtwn contracts
What does non-compliance of NCCP result in?
Civil penalties up to $500,000 and/or criminal charges
What are examples of non-legal measures?
- NSW Fair Trade
- Community Justice Centres
- Australian Financial Complaints Authority
- Financial Rights Legal Centre
- Redfern Legal Centre
What do NSW Fair Trading do?
Adminster consumer protection laws in NSW. Aims to achieve fairness for those in the marketplace by undertaking a range of activites such as educating consumers and traders info about their rights and responsibilites as well as Fair Trading Services
What do Community Justice Centres do?
- Provide free mediation and help reslove disputes
- Provide ADR tailored to help solve conflict
What does the Australian Financial Complaints Authority do?
(They are a financial ombudsman)
- Provide free services for individuals and small businesses with a complaint
- Find solutions to complaints that have gone unheard or unresolved
What does the Financial Rights Legal Centre do?
- Advise consumers from around Australia about their financial rights
- Help shape new laws to protect consumers and to enchance their future financial wellbeing
What does Redfern Legal Centre do?
Available to those living in Redfern Legal Centre’s catchment area
- Free and confidential legal advice and casework
- Deliver community legal education
- Enagage in law reform
What are the 3 contracts in BNPL?
- Consumer and BNPL
- Consumer and merchant
- BNPL and Merchant
What is the risk with BNPL?
They do not charge interest like traditional forms of credit and hence they do not have to comply with NCCP
What are responses to BNPL?
- Voluntary Code of Conduct
- Design and Distribution Obligation
- Mandatory Regulation 2023
What are key provisions in NCCP in regards to BNPL?
- Providers must hold an Australian Credit Licence
- Comply with Reasonable lending obligations
- Meet statutory dispute resolution and hardship requirements
- Comply with statutory product disclosure and other information obligations
- Abide by existing restrictions on unacceptable marketing
- Meet a range of other minimum standards in relation to their conduct, and in relation to their products.
