Is your business affected by the CONSUMER CREDIT CODE?
Question:
Do you provide money to buy goods, services or land, or to lease goods?
Answer:
If your answer is yes then you are providing credit.
If the credit is mostly for personal, household or domestic purposes and you charge for it and your customers are individuals or a residential strata corporation then the Consumer Credit Code applies to you.
Benefits to Business
The advantages of standardisation to businesses are many. For the first time, credit obligations and liabilities are clearly spelt out in a user-friendly way to improve consumer confidence, as debtors know their contract is backed by national legislation. The Code enables industries to administer their business more efficiently.
The Consumer Credit Code also allows for more flexibility in product development. Under previous credit laws, credit providers were hampered in how they structured their fees and charges which led to limited competition in the marketplace. The Code allows credit providers more freedom in how they organise their fees and charges as long as those fees and charges are explicitly disclosed.
Along with flexible product development, is the introduction of appropriate civil penalties and a more streamlined system of administration. This means a fairer system for both businesses and consumers.
As credit providers, finance brokers or lessors you need to be aware that the Consumer Credit Code is fully in force. Failure to comply with the Code can lead to civil penalties up to $500,000 and criminal charges so it is important to understand your obligations under the Code.
To ensure your business complies with the Code, please read the Consumer Credit Code Business Checklist . This checklist gives business people a plain language guide to setting out a credit contract in line with the Code. As the checklist is a general guide only, it is recommended that you also seek independent legal and other advice to ensure that you meet your obligations.
Any credit arrangement you make between yourself and a debtor must be in the form of a written contract. Before you enter a contract, you need to provide the debtor with a Precontractual Statement disclosing mandatory details about fees and charges; and an Information Statement explaining the debtor's rights and obligations.
For more information on what to include in these statements please refer to the Consumer Credit Code Business Checklist.
|
