What's New
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Instalment Contracts and the Uniform Consumer Credit Code
Amendments have been introduced into the Queensland Parliament to implement recommendations from the National Competition Policy Review of the Consumer Credit Code (the Code).
The amendments will be brought about by the Consumer Credit (Queensland) and Other Acts Amendment Bill 2008 (available for download) and will ensure “terms sale of land”, “conditional sale agreements” and “tiny terms contracts” are brought within the scope of the Code.
A terms sale of land (a sale on ‘vendor’s terms’ or a ‘wrap loan’) is a sale of land under which the purchase price is payable by instalments. The vendor lets the purchaser into possession but retains title until conveyance following the final payment.
A conditional sale agreement (or ‘Romalpa agreement’) is a sale of goods under which the purchase price is payable by instalments. The seller delivers the goods to the buyer but retains title until the final payment.
Tiny terms contracts are contracts where the cost of credit is incorporated into the cash price and the transaction is represented as a sale of goods by instalment (without any credit charges).
Technical amendments have also been drafted to capture contracts containing instalment payments that exceed the cash price of the goods, which are related to the contract for the actual sale of the goods.
These practices are arguably already covered by the Code as it is currently drafted. This was recently confirmed in relation to vendor terms by the Victorian Supreme Court decision in Geeveekay Pty Ltd & Ors v Director of Consumer Affairs Victoria [2008] VSC 50 (28 February 2008). However, due to doubts raised in the PIR and NCP Reports (as noted above), it was recommended the Code be amended through technical redrafting to put the situation beyond doubt.
By clarifying these practices are captured by the Code, consumers will benefit from key protections in the Code, including full disclosure of fees and charges, controls on the calculation of interest, access to hardship arrangements and procedural protections in enforcement situations.
Extensive consultation was undertaken with industry and the community during the NCP/PIR processes and stakeholder comments were considered when the final NCP recommendations were determined. An exposure draft Bill to amend the Code and Explanatory Paper were released for public consultation in October 2005. After extensive stakeholder feedback, the Bill was redrafted to take into account concerns raised. In February 2008, the Ministerial Council on Consumer Affairs approved the attached drafting of the amendments to the Code.
Once the amendments are passed by the Queensland Parliament, industry will be provided with at least 6 months before they are commenced. Further information about this will be announced on this website once the amendments have been passed.
Updated 17 April 2008
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August 2007 Consultation Package
MCCA has agreed to refinements in the August 2007 Consultation Package. The amendments are intended to enhance the operation of the Code by:
- Tightening current exemptions to the Code for short term credit and pawnbrokers;
- Dealing with abuses of business purpose declarations aimed at avoiding the Code;
- Enhancing consumer remedies under the Code by broadening existing powers of courts to review credit fees and charges and changes of interest;
- Providing Government Consumer Agencies with standing to conduct proceedings under the Code on behalf of consumers;
- Prohibiting lenders from taking ‘blackmail’ security over essential household items; and
Requiring that consumers be provided with information about their rights and responsibilities regarding direct debit payment arrangements
Updated 27 May 2008
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Bill Facilities (Promissory Notes) Regulation
As of Friday 30 November 2007, the Consumer Credit Code (the Code) applies to the use of bill facilities (promissory notes and bills of exchange) where the credit is provided wholly or predominantly for personal, domestic or household purposes. In Western Australia and Tasmania, this change will take effect at a slighter later date.
The application of the Code to bill facilities has been brought about by the Consumer Credit (Bill Facilities) Amendment Regulation 2007 (the Regulation). These are available for download. By bringing bill facilities within the Code, consumers will benefit from key protections in the Code, including full disclosure of fees and charges, controls on the calculation of interest, access to hardship arrangements and procedural protections in enforcement situations.
Bill facilities were previously exempt from the Code, as they are predominantly used for commercial purposes. However, bill facilities (especially promissory notes) have also been used by some consumer credit providers to avoid the Code. Promissory notes generally carry very high interest and other charges, and are targeted towards vulnerable and disadvantaged consumers. The enactment of this Regulation closes this loophole, and will ensure greater consumer protection for vulnerable and disadvantaged consumers.
It is important to note that this amendment will not apply to commercial bill facilities or to any bill facility (no matter what the purpose) provided by an ADI.
The proposal to bring all bill facilities under the Code was part of the Fringe Credit Providers’ Regulatory Impact Statement and public consultation took place on the draft Regulation last year.
Further information about this Regulation is available for download.
Updated 3 December 2007
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Streamlining pre-contractual disclosure
UCCCMC has commissioned an independent consultant to conduct research into pre-contractual disclosure with the goal of developing a disclosure model which addresses the needs of consumers.
The research will test the effectiveness of a range of disclosure models for different consumer credit products. The effectiveness of the disclosure models will be tested by conducting comprehension testing, focus groups discussions and cognitive testing. The effect timing has on the effectiveness of the pre-contractual disclosure information will also be examined. The results of these tests will inform the development of one or more revised disclosure models. The research is expected to be completed by mid 2009.
Updated 27 May 2008
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Mandatory Comparison Rates (MCR) Review
MCCA agreed to reform the scheme of Mandatory Comparison Rates in the Consumer Credit Code. There was in principle agreement to repeal the requirement to provide consumers with “schedules” of comparison rates, while the format and calculation of comparison rates in credit advertisements will be substantially revised. MCCA has also agreed to publicly release the final impact statement on Mandatory Comparison Rates.
The independent review is available for download here
Updated 27 May 2008
The new threshold is $278,457. The next change will be on 9 July 2008. Further information is available at Hardship Threshold.
Updated 19 June 2008
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Finance brokers - National Regulation
Almost 100 submissions were received on the Exposure Draft Finance Broking Bill 2007. Work is continuing on the issues raised in the submissions.
Updated 27 May 2008
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Responsible Lending – Credit Cards
A consultation regulatory impact statement is being prepared and should be released before the end of the year.
Updated 28 September 2007
In response to concerns raised about reverse mortgages, the Ministerial Council on Consumer Affairs has agreed that there should be a prescribed Information Statement for reverse mortgages and a statutory protection against negative equity.
Updated 28 September 2007
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External Dispute Resolution
The Ministerial Council on Counsumer Affairs has agreed to investigate the introduction of mandatory participation in external dispute resolution by all providers of consumer credit. The consultation regulatory impact statement is being prepared.
Updated 28 September 2007
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