ASIC Corporations (Product Intervention Order—Continuing Credit Contracts) Instrument 2022/648

The instrument relies on a short set of defined concepts and cross-references. These definitions determine who and what falls within the order and how to measure the fee ceiling.

Continuing credit contract is defined by reference to paragraph 12BAA(7)(k) of the Australian Securities and Investments Commission Act 2001 and, in the instrument, is described functionally as an arrangement under which multiple advances of credit are contemplated and the amount of available credit ordinarily increases as the amount of credit is reduced (s 4, definition). That description identifies revolving, increasing-availability arrangements rather than one-off or fixed-term advances.

Continuing credit provider is defined as a person purporting to rely on subsection 6(5) of the National Credit Code in relation to a continuing credit contract (s 4, definition). The instrument therefore targets providers who treat their product as falling within subsection 6(5) of the National Credit Code. Conversely, s 6(2) of the instrument says that where a provider is not purporting to rely on subsection 6(5) of the National Credit Code, the orders in s 5(1)-(4) do not apply to that contract, so the provider’s self-characterisation as relying on that subsection is determinative of the instrument’s application (s 6(2)).

Collateral contract is broadly defined to include any separate contract between the retail client and the continuing credit provider, or an associate, in relation to the continuing credit contract, and explicitly includes contracts for services such as administration, brokerage, management, collection, recovery or other services in relation to the provision of credit (s 4, definition). The instrument therefore brings into scope third-party or related-party side contracts that are functionally linked to the continuing credit contract.

Collateral non-cash payment facility is a defined exception: it is a non-cash payment facility operating in relation to a continuing credit contract where the issuer of the non-cash payment facility is the holder of an Australian financial services licence covering the provision of financial services in relation to the non-cash payment facility (s 4, definition). The definition connects the exclusion to the presence of an AFSL that covers the facility. The cap applied in s 5(5) expressly excludes fees payable under collateral contracts that are collateral non-cash payment facilities (s 5(5)(b)(i)(A)).

Buy now pay later arrangement is defined in three elements: (a) an arrangement between merchant and retail client for supply of goods or services; and (b) one of a set of arrangements where a BNPL provider either (i) pays the merchant some or all of the price; or (ii) provides a card identifier enabling the retail client to pay the merchant by card; or (iii) pays some or all of a merchant-issued bill through a bill payment system, and (c) an arrangement between the BNPL provider and the retail client which includes a continuing credit contract under which the retail client pays the BNPL provider over time (s 4, definition). The BNPL definition also contains a carve-out for merchants whose principal business is the supply of credit-related administration, brokerage, management, collection, recovery or other services, by excluding such merchants from the BNPL example (s 4, note). The instrument’s s 6(3) exempts continuing credit contracts that form part of a BNPL arrangement and where each advance arises as a result of the BNPL arrangement.

The compliance condition in the order is quantitative: s 5(5) requires summing (a) fees and charges that may be imposed or provided for under the continuing credit contract, and (b) fees and charges that may be imposed or provided for under collateral contracts (other than collateral non-cash payment facilities) or contracts that are part of the series/combination that constitute the continuing credit contract, provided those fees are paid or payable by the retail client. That total must not exceed the maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for that subsection (s 5(5)). The instrument therefore imports an external statutory/regulatory ceiling and sets a statutory obligation to observe it for the defined product class.

Finally, the instrument expressly places directors in scope by making it an offence under the order for a director to cause or authorise the provider (or associate) to act in breach of the condition (s 5(2), s 5(4)). The instrument also clarifies temporal application: it applies only to continuing credit contracts entered into on or after the commencement of the instrument (s 6(1)).

The instrument identifies several categories of persons and contracts that are in scope, and some that are outside scope. The immediate persons affected are continuing credit providers, their directors, and associates. Definitions and prohibitions specify conduct by these entities.

Continuing credit providers are the primary regulated population. A continuing credit provider is a person purporting to rely on subsection 6(5) of the National Credit Code in relation to a continuing credit contract (s 4). If a provider does not purport to rely on subsection 6(5), the order provisions in s 5(1)-(4) do not apply to that contract (s 6(2)). This means liability under the instrument attaches only where the provider holds their product out as relying on the particular NCC subsection; providers may therefore face incentives to recharacterise their products, but that is a factual/legal classification question that determines application of the instrument.

Directors of continuing credit providers and directors of associates are expressly bound by mirror prohibitions. Section 5(2) prohibits a director causing or authorising the provider to provide credit under a continuing credit contract except according to the condition in s 5(5). Section 5(4) similarly prohibits directors of a continuing credit provider or of an associate from causing or authorising the imposition of fees and charges under collateral contracts except in accordance with s 5(5). The inclusion of directors indicates the instrument reaches decision-making actors as well as corporate entities (s 5(2), s 5(4)).

Associates are in scope in two ways. First, an associate of a continuing credit provider may itself impose or provide for fees under a collateral contract and thereby be bound by s 5(3) and s 5(4). Second, collateral contracts can be entered into by the provider or an associate (s 4, collateral contract definition; s 5(3)). The instrument references the statutory meanings of associate in sections 11 and 15 of the Corporations Act (s 4, definition), so the universe of associates is defined by those Act provisions.

Retail clients are the persons who pay fees and charges and whose contractual arrangements are regulated. The instrument repeatedly frames obligations around fees “paid or payable by a retail client” (s 5(5)(b)(ii)). The instrument does not define “retail client” internally; the term is used in the operative prohibitions and definition of BNPL. The coverage therefore extends to any person characterised as a retail client in the broader legislative framework.

Merchants and BNPL providers feature in the BNPL definition (s 4). The instrument excludes certain continuing credit contracts where they form part of a BNPL arrangement and where each advance under the contract occurs as a result of the BNPL arrangement (s 6(3)). The BNPL definition also excludes merchants whose principal business is supplying credit-related administration, brokerage, management, collection, recovery or other services (s 4, BNPL definition note), so some merchant arrangements are not intended to be treated as BNPL for the purposes of the instrument.

Issuers of non-cash payment facilities that hold an Australian financial services licence covering the provision of financial services in relation to the facility are materially affected through the collateral non-cash payment facility concept. Such facilities are excluded from the calculation of the fee ceiling in s 5(5)(b)(i)(A) only if the issuer holds the specified AFSL coverage (s 4 definition; s 5(5)).

Finally, the instrument affects contract counterparties and service providers whose arrangements are collateral to continuing credit contracts, because fees payable under such collateral contracts are counted towards the cap unless the collateral contract is a collateral non-cash payment facility (s 4; s 5(5)(b)(i)(A)). This brings into scope firms providing administrative or collection services under collateral arrangements described in the definition of collateral contract.

Geography and timing: the instrument applies to continuing credit contracts entered into on or after the instrument’s commencement, which occurs on the second day after registration (s 2, s 6(1)). The instrument will remain in force for 18 months from commencement unless affected by court order (note to s 6).

The instrument creates specific prohibitions and a single condition that governs permitted conduct. The operative duties and constraints are concentrated in Part 2, section 5.

Mandatory prohibition on providing credit except where the condition is met: Section 5(1) provides that a continuing credit provider must not provide credit to a retail client under a continuing credit contract except in accordance with the condition set out in subsection 5(5). This makes the condition a prerequisite for lawful provision of credit under covered contracts (s 5(1)).

Director duties: Directors of continuing credit providers are subject to a parallel duty: s 5(2) prohibits a director from causing or authorising the provider to provide credit under a continuing credit contract, except in accordance with the condition in s 5(5). Directors of continuing credit providers and associates are similarly prohibited from causing or authorising the imposition of fees under collateral contracts except under the condition (s 5(4)). These provisions place the onus partly on responsible officers to prevent breaches of the order.

Prohibition on fees under collateral contracts: Section 5(3) prohibits continuing credit providers and associates from imposing or providing for fees and charges under a collateral contract in relation to a continuing credit contract unless the condition in s 5(5) is met. The collateral contract concept is broad and explicitly includes contracts for services such as administration, collection or recovery (s 4, collateral contract).

The condition,quantitative cap: Section 5(5) sets out the condition that must be satisfied for the prohibitions not to bite. Compliance requires that the total of:

• (a) the amount of fees and charges that may be imposed or provided for under the continuing credit contract; and
• (b) the amount of fees and charges that (i) may be imposed or provided for under (A) a collateral contract (other than a collateral non-cash payment facility) or (B) a contract, arrangement or understanding that belongs to a series or combination that constitutes the continuing credit contract (except for fees already counted under paragraph (a)); and (ii) are paid or payable by a retail client,

must not exceed the maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for that subsection (s 5(5)).

Implication of exclusion for certain collateral facilities: The instrument expressly excludes fees under collateral non-cash payment facilities from the calculation in s 5(5)(b)(i)(A). That exclusion only applies where the issuer of the non-cash payment facility holds an Australian financial services licence covering provision of financial services in relation to that facility (s 4, collateral non-cash payment facility; s 5(5)(b)(i)(A)). The effect is to treat fees arising from such licensed non-cash payment facilities as outside the cap calculation.

Temporal scope of duties: The duties created by s 5 apply only to contracts entered into on or after the commencement of the instrument (s 6(1)). They therefore impose prospective obligations rather than retrospective ones.

Carve-outs and definitional rights: The instrument recognises two avenues by which a person can avoid application of the duties. First, if a provider is not purporting to rely on subsection 6(5) of the National Credit Code, then s 5(1)-(4) do not apply to the contract (s 6(2)). Second, the instrument does not apply to continuing credit contracts that are part of a BNPL arrangement where each advance of credit under the continuing credit contract occurs as a result of the BNPL arrangement (s 6(3)).

Who decides what is “paid or payable” and what counts as a collateral contract is not set out in the instrument, so parties must interpret the definitions in context and, where ambiguity exists, may need to resolve the matter by reference to the wider statutory framework or by seeking legal clarification. The instrument itself contains no separate schedule of fees or definition of the dollar limit; it refers to the National Credit Code s 6(5) and any regulations under it for the numerical limit (s 5(5)), so compliance requires reference to that external provision.

The instrument is an ASIC product intervention order made under subsection 1023D(3) of the Corporations Act 2001 (s 3). The instrument itself contains no express civil or criminal penalty clauses, pecuniary penalties, or administrative sanction schedules within its text. It sets prohibitions and a condition, but does not in isolation specify the enforcement measures or penalties for non-compliance. The instrument includes two notes that are relevant to enforcement: it states that the application of the orders is subject to the limitations in section 1023C of the Corporations Act and that, subject to any court order staying or otherwise affecting the operation of the orders, they will remain in force for 18 months from commencement (Notes to s 6; see subsections 1023G(2) and 1023C as referenced).

Operationally, the instrument places individual and corporate actors in a position where acting contrary to s 5(1)-(4) would be a contravention of the order. The instrument reaches both entities and directors by imposing prohibitions on causing or authorising the relevant conduct (s 5(2), s 5(4)). The instrument does not itself set out enforcement mechanisms such as injunctions, pecuniary penalties or criminal sanctions; the pathway to enforcement therefore lies in the remedies and enforcement powers that exist in the Corporations Act and related legislation under which the product intervention powers were exercised. The instrument’s notes explicitly reference those statutory limitations and temporal provisions (note to s 6).

Because the instrument references external statutory provisions for both authority (s 3, subsection 1023D(3) of the Corporations Act) and the quantitative ceiling (subsection 6(5) of the National Credit Code or regulations made for that subsection), the enforcement regime and penalty consequences for non-compliance are determined by the wider legislative framework rather than by the instrument itself. Parties seeking to understand enforcement exposure therefore must read the instrument in conjunction with the Corporations Act provisions that authorise product intervention orders and with any statutory enforcement apparatus that attaches to contraventions of such orders.

The instrument also makes explicit that a court may make an order staying or otherwise affecting the operation of the orders, which is an avenue for affected parties to seek judicial relief from the instrument’s operation (note to s 6). The instrument does not specify procedural steps for lodging such proceedings; the note merely records the existence of the judicial avenue and the instrument’s finite duration (18 months) unless a court order intervenes.

In short, this instrument creates prospective regulatory obligations with respect to continuing credit contracts and related collateral contracts but leaves enforcement detail to the Corporations Act framework that authorised the instrument, and to possible judicial orders affecting operation and duration. The text does not provide standalone penalty clauses within the instrument itself.

This instrument is explicitly cross-referential: it is made under subsection 1023D(3) of the Corporations Act 2001 (s 3), and it imports operational content from the National Credit Code. The target product is defined by reference to paragraph 12BAA(7)(k) of the Australian Securities and Investments Commission Act 2001 and the instrument sets the compliance ceiling by reference to subsection 6(5) of the National Credit Code or regulations made for that subsection (s 4; s 5(5)). The instrument therefore functions as an overlay on existing statutory regimes rather than as a freestanding regulatory code.

Authority and limits under the Corporations Act: The instrument’s authority statement (s 3) and the note in s 6 make clear that the orders operate within the bounds established by the Corporations Act product intervention power. The instrument itself does not reproduce any limits or sanctions contained in the Corporations Act; rather, it relies on that Act for authority and, in practice, for enforcement mechanisms, limitations on the scope of orders, and possible judicial review (s 3; note to s 6 referencing s 1023C and s 1023G(2)).

Interaction with the National Credit Code: The instrument’s compliance condition makes the National Credit Code’s subsection 6(5) pivotal. The instrument does not restate the monetary or formulaic content of subsection 6(5); instead, it caps total fees and charges by reference to “the maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for the purposes of that subsection” (s 5(5)). This creates a direct operational dependency. Any interpretation of what the cap means, how it is calculated, or what regulations apply will require reference to subsection 6(5) and any subordinate instruments made under it. The instrument also ties its own application to whether providers are “purporting to rely on subsection 6(5) of the National Credit Code” (s 4, continuing credit provider; s 6(2)), so a provider’s legal characterisation under the National Credit Code has direct consequences for application of the ASIC order.

Relation to AFSL regime and non-cash payment facilities: The instrument treats collateral non-cash payment facilities differently where the issuer holds an Australian financial services licence that covers provision of financial services in relation to the facility (s 4, collateral non-cash payment facility). This introduces interaction with the AFSL regime because the exclusion from the fee cap applies only to non-cash payment facilities whose issuer has the AFSL coverage specified. Parties operating such facilities must therefore align the licensing status of the facility with the intended treatment under the instrument.

BNPL structures and other product definitions: The instrument’s BNPL definition engages merchants, BNPL providers, and bill payment systems (s 4). Section 6(3) expressly excludes continuing credit contracts that form part of a BNPL arrangement where each advance occurs as a result of the BNPL arrangement. That creates a carve-out for certain BNPL models, but the BNPL definition contains a restriction that the merchant’s principal business must not be supplying credit administration or other credit services (s 4, BNPL definition note). Interactional questions will therefore arise at the interface between BNPL arrangements, continuing credit contracts, and the National Credit Code: whether a product is a BNPL arrangement for the purpose of s 6(3); whether it is a continuing credit contract under the definition; and whether the provider purports to rely on subsection 6(5) of the National Credit Code (s 4; s 6(2)-(3)).

Collateral contracts and corporate law: The collateral contract concept reaches arrangements between retail clients and associates of continuing credit providers (s 4, collateral contract). Because the instrument also references the statutory meanings of associate in sections 11 and 15 of the Corporations Act (s 4), corporate law definitions of control and association will govern which third-party arrangements fall within the instrument’s scope. That creates an interaction between corporate attribution rules and consumer credit regulation.

Temporal interaction with commencement and existing contracts: The instrument applies only to continuing credit contracts entered into on or after commencement (s 6(1)). Therefore, existing continuing credit contracts entered into prior to commencement are not covered by this instrument’s prohibitions. The instrument’s commencement rule and its 18-month prospective duration (note to s 6 referencing s 1023G(2)) also interact with any future statutory amendments to the National Credit Code or Corporations Act made during that period.

In sum, the instrument is embedded in a statutory matrix and deliberately cross-references external provisions rather than reproducing their content. Interpretation and operational effect require concurrent reading of the Corporations Act provisions authorising product intervention, the National Credit Code subsection 6(5) (and any regulations under it), the AFSL regime for non-cash payment facilities, and corporate law definitions of associates. The instrument itself provides the bridging language that connects those regimes.

The instrument text supplied contains only the original making details and does not record any subsequent amendments. The instrument was made by Greg Yanco, delegate of the Australian Securities and Investments Commission, dated 13 July 2022 (front page). The instrument’s name and text as presented include provisions on commencement (s 2), authority (s 3), definitions (s 4), the order (Part 2, s 5), and application (s 6). There is no schedule of amendments, no revocation clause within the instrument text, and no footnote indicating prior versions or repeals.

The instrument’s temporal structure is specified: it commences on the second day after registration on the Federal Register of Legislation (s 2), and a note indicates that the orders will remain in force for 18 months from commencement subject to any court order staying or otherwise affecting their operation (note to s 6; cf. subsection 1023G(2) referenced). The note also states that the application of the orders in s 5 is subject to the limitations in section 1023C of the Corporations Act (note to s 6). Those references indicate that the instrument was made pursuant to the Corporations Act product intervention powers and is intended as a time-limited order, rather than as a permanent legislative change recorded in the instrument itself.

Because the instrument refers to “regulations made for the purposes of” subsection 6(5) of the National Credit Code (s 5(5)), any subsequent regulations issued under the National Credit Code would affect how the instrument operates in practice. However, the instrument text does not document such regulations or their dates; it merely imports them by reference.

Absent any recorded amendment history in the provided text, readers should treat the instrument as the primary original instrument made on the stated date. Any later amendments, repeals or related legislative instruments would need to be checked against the Federal Register of Legislation or other authoritative registers. The instrument itself provides no internal amendment record and contains no transitional amendment provisions to or from other instruments.

The supplied instrument text contains no record of litigation or judicial determinations concerning the instrument. The instrument does contain a note that, subject to the Court making an order staying or otherwise affecting the operation of the orders in section 5, the orders will remain in force for 18 months from commencement (note to s 6; see subsection 1023G(2) of the Act as referenced). That note recognises the availability of judicial process to stay or otherwise affect the operation of the order, but it does not record any instance in which such relief has been sought or granted.

Because the instrument is a product intervention order made under the Corporations Act, any enforcement action, judicial review, or challenge would take place within the broader Corporations Act framework and the court system. The instrument text does not include or refer to any past or pending court proceedings, declaratory judgments, injunctions, or other litigation matters. Consequently, there is no litigation history supplied in this instrument.

Users requiring information on whether the instrument has been the subject of litigation or judicial review will need to consult court records, the Federal Register of Legislation, or other contemporaneous legal reporting sources for events occurring after the date on the instrument (13 July 2022), because nothing of that nature appears in the instrument text provided.

This instrument contains several drafting and application features that warrant careful attention by practitioners because the operative effect depends on definitional turns, cross-references and exclusions.

1. Reliance on paragraph 12BAA(7)(k) and subsection 6(5): The instrument defines “continuing credit contract” by reference to paragraph 12BAA(7)(k) of the Australian Securities and Investments Commission Act 2001 and by an internal functional description (s 4). It then ties the scope of regulated providers to whether a person is “purporting to rely on subsection 6(5) of the National Credit Code” (s 4, definition of continuing credit provider; s 6(2)). That means a provider’s self-characterisation under the National Credit Code is material to whether the instrument applies. Small drafting choices or legal arguments about whether a provider “purports to rely” on subsection 6(5) may therefore change whether the order binds the product.

2. Exclusion for BNPL arrangements is twofold and potentially narrow: Section 6(3) excludes continuing credit contracts if (a) the contract forms part of a BNPL arrangement as defined in s 4, and (b) each advance under the continuing credit contract occurs as a result of the BNPL arrangement. Both conditions must be satisfied. The BNPL definition is multi-factored and contains an explicit limitation that the merchant’s principal business must not be the supply of credit administration or related services (s 4). Parties structuring BNPL offerings must therefore ensure both limbs are met if they intend to rely on the exemption; otherwise the order will apply.

3. Collateral contracts are broadly defined: The “collateral contract” definition explicitly includes contracts for administration, brokerage, management, collection, recovery or other services in relation to the provision of credit (s 4). Those services are common in outsourcing and servicer arrangements. Fees payable under such contracts will usually be counted toward the cap in s 5(5) unless they are part of a collateral non-cash payment facility that satisfies the AFSL condition.

4. Collateral non-cash payment facility exclusion depends on AFSL coverage: Fees under collateral non-cash payment facilities are excluded from the cap only if the issuer is the holder of an Australian financial services licence covering the provision of financial services in relation to the facility (s 4; s 5(5)(b)(i)(A)). If an issuer lacks the AFSL coverage specified, the exclusion does not apply and those fees will likely be counted toward the cap. The drafting thus creates a material licensing threshold for the exclusion to apply.

5. Counting rules require aggregation across contracts and series: Section 5(5) requires aggregation of fees under the continuing credit contract and fees under collateral contracts or contracts that “belong to a series or combination” that constitute the continuing credit contract (s 5(5)(a)-(b)). The instrument therefore captures multi-contract structures and composite arrangements; product designers cannot simply move fees into a separate contract nominally outside the continuing credit contract if that contract is part of the same series or combination.

6. The monetary cap is external: The instrument does not state the numeric cap; instead it references the “maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for the purposes of that subsection” (s 5(5)). Parties must therefore consult the National Credit Code and any associated regulations to determine the specific dollar or formulaic limit. Any ambiguity or change in those external provisions affects compliance with the instrument.

7. Temporal application is prospective: The instrument applies only to contracts entered into on or after commencement (s 6(1)). Existing continuing credit contracts are not caught, but subsequent contract renewals or new advances may fall within scope. Practitioners should be careful when structuring renewals or amendments that could be treated as new contracts entered post-commencement.

8. Directors are directly addressed: The instrument prohibits directors from causing or authorising specified conduct (s 5(2), s 5(4)). Directors therefore need to be aware that approval of product terms that breach the cap may expose the company and the responsible directors to consequences under the product intervention regime and the broader Corporations Act framework (as referenced in the instrument).

9. Interactional ambiguity with “paid or payable by a retail client”: The clause in s 5(5)(b)(ii) that caps fees which “are paid or payable by a retail client” will require contractual and accounting analysis to determine whether a given fee is counted as paid or payable by the retail client, or instead by a merchant or another party. Pricing structures that pass fees through to merchants or third parties may affect how the cap operates in practice.

10. Duration and judicial review: The instrument is time‑limited in practical effect: it will remain in force for 18 months from commencement unless a court stays it (note to s 6). Parties may seek judicial orders affecting the operation of the instrument, and the note acknowledges that possibility, creating potential timing and legal-strategy considerations.

Each of these features is rooted in the instrument’s text (s 2; s 3; s 4; s 5; s 6). Practitioners must therefore consider classification, contract series, licensing status of non-cash payment facility issuers, and the external statutory cap in the National Credit Code when advising on or structuring continuing credit products.

The instrument creates a discrete compliance task: ensure that any continuing credit contract entered into on or after commencement does not result in a total of fees and charges payable by the retail client that exceeds the maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for that subsection (s 5(5)). Compliance therefore requires a sequence of concrete steps.

1. Product classification exercise

• Determine whether the contract is a “continuing credit contract” as defined in s 4. The instrument describes such contracts as those where multiple advances are contemplated and available credit ordinarily increases as credit is reduced.
• Confirm whether the provider is “purporting to rely on subsection 6(5) of the National Credit Code” in relation to the contract. If not, s 5(1)-(4) do not apply (s 6(2)). Document the legal basis for any characterisation.

2. Identify all related contracts and series

• Map the contractual ecosystem: list the continuing credit contract itself plus any collateral contracts between the retail client and the provider or an associate. The instrument defines collateral contracts broadly and includes service contracts for administration, collection and recovery (s 4).
• Identify contracts that “belong to a series or combination” that constitute the continuing credit contract and ensure they are included in the aggregation (s 5(5)(b)(i)(B)).

3. Determine licensing status of non-cash payment facilities

• Identify any non-cash payment facilities operating in relation to the continuing credit contract.
• Confirm whether the issuer of such a facility holds an Australian financial services licence that covers the provision of financial services in relation to that facility. Only where that AFSL coverage exists will a collateral non-cash payment facility be excluded from the cap calculation (s 4; s 5(5)(b)(i)(A)). Maintain documentary evidence of the AFSL and its coverage.

4. Calculate the aggregate fees

• Quantify the amounts of fees and charges that may be imposed or provided for under the continuing credit contract (s 5(5)(a)).
• Quantify the amounts of fees and charges that may be imposed or provided for under each collateral contract or contract in the series/combination, except for those fees already counted under the continuing credit contract (s 5(5)(b)(i)).
• Include only fees that are “paid or payable by a retail client” (s 5(5)(b)(ii)). Document the basis for the determination that a fee is payable by the retail client rather than by another party.

5. Compare against the external cap

• Determine the “maximum charge permitted under subsection 6(5) of the National Credit Code or regulations made for the purposes of that subsection” as referenced by the instrument (s 5(5)). The instrument does not state the numeric cap; compliance requires reference to subsection 6(5) of the National Credit Code and any regulations under it.
• Ensure the aggregate calculated in step 4 does not exceed the maximum permitted charge.

6. Governance and director sign-off

• Because the instrument prohibits directors from causing or authorising contraventions (s 5(2), s 5(4)), implement director-level sign-off processes and compliance attestation for product approvals, changes to fee schedules, and collateral contracting.
• Maintain board minutes or director resolutions that record compliance checks and the basis for concluding that the condition in s 5(5) is met.

7. Contract drafting and disclosure

• Amend contract templates to reflect fee limits, and ensure collateral contracts are drafted to align with the fee aggregation approach.
• Where applicable, ensure disclosures to retail clients accurately reflect the total fees payable and whether any non-cash payment facility fees are excluded from the cap due to AFSL coverage.

8. Operational controls and monitoring

• Implement billing and accounting controls to ensure fees charged do not exceed the permitted total across the contract portfolio for each retail client.
• Establish monitoring to capture new collateral contracts, fee changes, or series combinations that could alter the aggregation calculation.

9. BNPL considerations

• If the product is part of a BNPL arrangement, confirm whether the BNPL exclusion in s 6(3) applies: the continuing credit contract must form part of a BNPL arrangement as defined in s 4 and each advance must occur as a result of the BNPL arrangement. If the conditions are satisfied, the instrument will not apply to the contract (s 6(3)). Document factual predicates supporting any BNPL characterisation.

10. Legal and regulatory liaison

• Because the instrument ties the cap to the National Credit Code’s subsection 6(5) and to regulations under it, consult legal counsel to interpret the cap and to confirm whether any relevant regulations apply.
• Consider whether AFSL status and coverage need to be changed or clarified for non-cash payment facility issuers if parties intend to rely on the collateral non-cash payment facility exclusion.

11. Recordkeeping and evidence

• Keep contemporaneous records demonstrating the calculations, the basis for inclusion/exclusion of contracts and fees, director approvals, and any licensing documentation that supports an exclusion for non-cash payment facilities.

12. Timing and commencement

• Apply these compliance steps prospectively for contracts entered into on or after the instrument’s commencement date (s 6(1)). Contracts entered into before commencement are outside the instrument’s scope.

Following these steps will align commercial, contractual and governance arrangements with the instrument’s requirements as expressed in s 5 and s 6 and the definitions in s 4. The essential compliance vector is ensuring the aggregate of specified fees payable by a retail client does not exceed the external maximum under the National Credit Code subsection 6(5) or related regulations, and documenting the factual and legal bases for all classifications and calculations.