Manner of giving credit proposal disclosure document
(4) The licensee must give the credit proposal disclosure document to the consumer in the manner (if any) prescribed by the regulations.
122 No profiting from fees etc. paid to third parties
Requirement not to profit
(1) If, in the course of providing credit assistance to a consumer in relation to a credit contract, a licensee pays an amount (the third party amount) to another person on behalf of the consumer, the licensee must not request or demand payment of an amount, as reimbursement for the third party amount, that exceeds the third party amount.
Civil penalty: 5,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 6 months imprisonment.
Division 6—Prohibition on suggesting, or assisting with, unsuitable credit contracts
123 Prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts
Prohibition on suggesting, or assisting with, unsuitable contracts
(1) A licensee must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider;
if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 5,000 penalty units.
When the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time the licensee provides the credit assistance, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship; or
(b) the contract will not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances will apply to the contract;
if the contract is entered in the period proposed for it to be entered or the credit limit is increased in the period proposed for it to be increased.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
(3AA) For the purposes of paragraph (2)(a), a consumer is taken to be able to comply with the consumer’s financial obligations under a contract only with substantial hardship if:
(a) the contract is a credit card contract; and
(b) the consumer could not comply with an obligation to repay an amount equal to the credit limit of the contract within the period determined by ASIC under section 160F.
Information to be used to determine if contract will be unsuitable
(4) For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time the licensee provides the credit assistance:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
Credit contract not unsuitable under regulations
(5) The regulations may prescribe particular situations in which a credit contract is taken not to be unsuitable for a consumer, despite subsection (2).
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 2 years imprisonment.
124 Prohibition on suggesting to consumers to remain in unsuitable credit contracts
Prohibition on suggesting to remain in unsuitable contracts
(1) A licensee must not provide credit assistance to a consumer by suggesting that the consumer remain in a particular credit contract with a particular credit provider if the contract is unsuitable for the consumer under subsection (2).
Civil penalty: 5,000 penalty units.
When the contract is unsuitable
(2) The credit contract is unsuitable for the consumer if, at that time the licensee provides the credit assistance:
(a) the consumer is, or is likely to be, unable to comply with the consumer’s financial obligations under the contract, or only able to comply with substantial hardship; or
(b) the contract does not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances apply to the contract.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
(3A) For the purposes of paragraph (2)(a), a consumer is taken to be able to comply with the consumer’s financial obligations under a contract only with substantial hardship if:
(a) the contract is a credit card contract; and
(b) the consumer could not comply with an obligation to repay an amount equal to the credit limit of the contract within the period determined by ASIC under section 160F.
Information to be used to determine if contract is unsuitable
(4) For the purposes of determining under subsection (2) whether the contract is unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time the licensee provides the credit assistance:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
Credit contract not unsuitable under regulations
(5) The regulations may prescribe particular situations in which a credit contract is taken not to be unsuitable for a consumer, despite subsection (2).
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 2 years imprisonment.
Defence
(7) For the purposes of subsections (1) and (6), it is a defence if:
(a) the licensee suggested that the consumer remain in the credit contract because, after making reasonable inquiries, the licensee reasonably believed that there was no other credit contract that was not unsuitable for the consumer; and
(b) the licensee informed the consumer that there is a procedure under sections 72 and 94 of the National Credit Code for consumers in hardship.
Note: For the purposes of subsection (6), a defendant bears an evidential burden in relation to the matter in subsection (7) (see subsection 13.3(3) of the Criminal Code).
(8) The regulations may prescribe particular inquiries that must be made, or do not need to be made, for the purposes of paragraph (7)(a).
Division 7—Special rules for short‑term and small amount credit contracts
124A Prohibition on providing credit assistance in relation to short‑term credit contracts
Prohibition
(1) A licensee must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a short‑term credit contract; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular short‑term credit contract with a particular credit provider.
Civil penalty: 5,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
124B Licensee who makes representations about credit assistance in relation to small amount credit contracts must display and give information
Requirement
(1) If a licensee represents that the licensee provides, or is able to provide, credit assistance to consumers in relation to small amount credit contracts, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
(3) In making the determination under subsection (2), ASIC must take into account the risks associated with small amount credit contracts and the alternatives that may be available to consumers.
Offence
(4) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
124C Written documentation required in relation to the preliminary assessment for a small amount credit contract
(1) If, in a preliminary assessment made for the purposes of paragraph 115(1)(c) or (2)(a), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before providing credit assistance to the consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for the small amount credit contract; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for the increase to the credit limit of the small amount credit contract which is the subject of that preliminary assessment; or
(c) suggesting that the consumer remain in the small amount credit contract;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(d) the preliminary assessment; and
(e) the inquiries and verification made for the purposes of paragraph 115(1)(d) or (2)(b) in relation to that preliminary assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(d) and (e) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
Part 3‑2—Licensees that are credit providers under credit contracts: general rules
Division 1—Introduction
125 Guide to this Part
This Part has rules that apply to licensees that are credit providers. These rules are aimed at better informing consumers and preventing them from being in unsuitable credit contracts.
Division 2 requires a licensee to give its credit guide to a consumer. The credit guide has information about the licensee and some of the licensee’s obligations under this Act.
Division 3 requires a licensee, before doing particular things (such as entering a credit contract), to make an assessment as to whether the contract will be unsuitable. To do this, the licensee must make inquiries and verifications about the consumer’s requirements, objectives and financial situation. The licensee must give the consumer a copy of the assessment if requested.
Division 4 prohibits a licensee from entering or increasing the credit limit of a credit contract that is unsuitable for a consumer.
Division 2—Credit guide of credit providers
126 Credit guide of credit providers
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it becomes apparent to the licensee that it is likely to enter a credit contract with a consumer who will be the debtor under the contract, give the consumer the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 5,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the AFCA scheme; and
(f) give information about the licensee’s obligations under sections 132 and 133; and
(g) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe information that need not be included in the credit guide, despite subsection (2).
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
127 Credit guide of credit providers who are assignees
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it has been assigned any rights or obligations of a credit provider under a credit contract, give the debtor under the contract the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 5,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the AFCA scheme; and
(f) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe information that need not be included in the credit guide, despite subsection (2).
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Division 3—Obligation to assess unsuitability
128 Obligation to assess unsuitability
A licensee must not:
(a) enter a credit contract with a consumer who will be the debtor under the contract; or
(aa) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract with the licensee; or
(b) increase the credit limit of a credit contract with a consumer who is the debtor under the contract; or
(ba) make an unconditional representation to a consumer that the licensee considers that the credit limit of credit contract between the consumer and the licensee will be able to be increased;
on a day (the credit day) unless the licensee has, within 90 days (or other period prescribed by the regulations for the purposes of this section) before the credit day:
(c) made an assessment that:
(i) is in accordance with section 129; and
(ii) covers the period in which the credit day occurs; and
(d) made the inquiries and verification in accordance with section 130.
Note: Part 3‑2BA affects how this section, and other provisions in this Part, apply in relation to certain low cost credit contracts.
Civil penalty: 5,000 penalty units.
129 Assessment of unsuitability of the credit contract
For the purposes of paragraph 128(c), the licensee must make an assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the credit contract will be unsuitable for the consumer if the contract is entered or the credit limit is increased in that period.
Note: The licensee is not required to make the assessment under this section if the contract is not entered or the credit limit is not increased.
130 Reasonable inquiries etc. about the consumer
Requirement to make inquiries and take steps to verify