(1) For the purposes of paragraph 128(d), the licensee must, before making the assessment:
(a) make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract; and
(b) make reasonable inquiries about the consumer’s financial situation; and
(c) take reasonable steps to verify the consumer’s financial situation; and
(d) make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and
(e) take any steps prescribed by the regulations to verify any matter prescribed by the regulations.
Civil penalty: 5,000 penalty units.
(1A) If:
(a) the credit contract is a small amount credit contract; and
(b) the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 128(d), obtain and consider information about each transaction on the account, and the balances of the account, during at least the immediately preceding period of 90 days.
(1B) Subsection (1A) does not limit paragraph (1)(c) of this section.
(2) The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a), (b) or (c).
131 When credit contract must be assessed as unsuitable
Requirement to assess the contract as unsuitable
(1) The licensee must assess that the credit contract will be unsuitable for the consumer if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 5,000 penalty units.
Note: Even if the contract will not be unsuitable for the consumer under subsection (2), the licensee may still assess that the contract will be unsuitable for other reasons.
Particular circumstances when the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time of the assessment, 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, if the contract is entered or the credit limit is increased in the period covered by the assessment; or
(b) the contract will not meet the consumer’s requirements or objectives if the contract is entered or the credit limit is increased in the period covered by the assessment; 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 or the credit limit is increased in the period covered by the assessment.
(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 130(1)(d) or (e);
(b) at the time of the assessment:
(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 130.
132 Giving the consumer the assessment
Requirement to give assessment if requested
(1) If, before entering the credit contract or increasing the credit limit, the consumer requests the licensee for a copy of the assessment, the licensee must give the consumer a written copy of the assessment before entering the contract or increasing the credit limit.
Note: The licensee is not required to give the consumer a copy of the assessment if the contract is not entered or the credit limit is not increased.
Civil penalty: 5,000 penalty units.
(2) If, during the period that:
(a) starts on the day (the credit day) the credit contract is entered or the credit limit is increased; and
(b) ends 7 years after that day;
the consumer requests the licensee for a copy of the assessment, the licensee must give the consumer a written copy of the assessment:
(c) if the request is made within 2 years of the credit day—before the end of 7 business days after the day the licensee receives the request; and
(d) otherwise—before the end of 21 business days after the day the licensee receives the request.
Civil penalty: 5,000 penalty units.
Manner of giving assessment
(3) The licensee must give the consumer the copy of the assessment in the manner (if any) prescribed by the regulations.
No payment for assessment
(4) The licensee must not request or demand payment of an amount for giving the consumer a copy of the assessment.
Civil penalty: 5,000 penalty units.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1), (2) or (4); 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 4—Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts
133 Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts
Prohibition on entering etc. unsuitable contracts
(1) A licensee must not:
(a) enter a credit contract with a consumer who will be the debtor under the contract; or
(b) increase the credit limit of a credit contract with a consumer who is the debtor under the contract;
if the contract is unsuitable for the consumer under subsection (2).
Civil penalty: 5,000 penalty units.
When the contract is unsuitable
(2) The contract is unsuitable for the consumer if, at the time it is entered or the credit limit is increased:
(a) it is likely that 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 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.
(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 130(1)(d) or (e);
(b) at the time the contract is entered or the credit limit is increased:
(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 130.
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.
Note: Sections 178 and 179 provide for remedies for anyone who suffers, or is likely to suffer, loss or damage because of a breach of this section. For example, if a consumer makes an unsuitable credit contract with a licensee, rather than making a not unsuitable credit contract for a reverse mortgage, a person who suffered, or is likely to suffer, loss as a result may be able to get court orders under section 178 or 179 to put the person in a position like the one they would have been in had the consumer entered into the contract for the reverse mortgage.
Part 3‑2A—Licensees that are credit providers under credit contracts: additional rules relating to standard home loans
Division 1—Introduction
133A Guide to this Part
This Part has rules that apply to licensees that are credit providers under standard home loans. It applies in addition to the general rules in Part 3‑2.
Division 2 imposes requirements aimed at ensuring a consumer can obtain a Key Facts Sheet for a standard home loan.
Division 2—Key Facts Sheets for standard home loans
133AA What is a standard home loan?
(1) A standard home loan of a licensee is a standard form of credit contract under which the licensee provides credit:
(a) to purchase residential property; or
(b) to refinance credit that has been provided wholly or predominantly to purchase residential property.
(2) The regulations may make provisions that apply to determining, for the purpose of subsection (1), whether a credit contract is a standard form of credit contract.
133AB What is a Key Facts Sheet for a standard home loan?
(1) A Key Facts Sheet for a standard home loan is a document:
(a) that contains the information relating to the standard home loan that is required by the regulations; and
(b) that complies with any other requirements prescribed by the regulations.
(2) Without limiting paragraph (1)(a), regulations made for the purpose of that paragraph:
(a) may require a Key Facts Sheet for a standard home loan to contain information:
(i) that is specific to the consumer by whom the Key Facts Sheet is to be generated under section 133AC or to whom it is to be provided under section 133AD; and
(ii) that relates to the cost or implications of the loan for the consumer; and
(b) may require information contained in a Key Facts Sheet for a standard home loan to be based on either or both of the following:
(i) information provided by the consumer;
(ii) particular assumptions.
133AC Credit provider’s website to provide capacity to generate Key Facts Sheet
When this section applies
(1) This section applies if a licensee has a website that can be used by a consumer to apply for, or make an inquiry about, one or more standard home loans of the licensee.
Requirement
(2) The licensee must ensure that the website satisfies all of the following paragraphs:
(a) the website tells the consumer that the consumer may use the website to generate a Key Facts Sheet for the standard home loan, or for each of the standard home loans;
(b) the website:
(i) tells the consumer what information the consumer will need to enter in order to generate the Key Facts Sheet or Sheets; and
(ii) provides the consumer with instructions on how to generate the Key Facts Sheet or Sheets;
(c) if the consumer enters the information and follows those instructions, the consumer can use the website to generate the Key Facts Sheet or Sheets, containing up‑to‑date information, in a form that can be printed;
(d) the website complies with any other requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
133AD Credit provider to provide Key Facts Sheet in other situations
When this section applies
(1) This section applies if:
(a) either:
(i) a consumer makes a request to a licensee (otherwise than by using a website of the licensee) to be provided with a Key Facts Sheet for one or more standard home loans of the licensee that are specified in the request; or
(ii) the regulations require a consumer, in circumstances prescribed by the regulations, to be provided with a Key Facts Sheet for one or more standard home loans of a licensee; and
(b) the consumer has given the licensee the consumer’s name, and the contact details required by the regulations.
Requirement
(2) The licensee must, in accordance with any requirements prescribed by the regulations:
(a) provide the consumer with a Key Facts Sheet containing up‑to‑date information for the standard home loan, or for each of the standard home loans; and
(b) provide the consumer with any other information relating to other standard home loans of the licensee that is required by the regulations.
Note: Subsection 133AE(4) and section 133AF provide defences to liability under this subsection.
Civil penalty: 5,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
Note: Subsection 133AE(4) and section 133AF provide defences to liability under this subsection.
133AE What if more information is needed from the consumer?
When this section applies
(1) This section applies if:
(a) a licensee is required by section 133AD to provide a consumer with a Key Facts Sheet for a standard home loan; but
(b) the licensee does not have all the information from the consumer that the licensee needs in order to be able to prepare the Key Facts Sheet.
Requirement
(2) The licensee must, in accordance with any requirements prescribed by the regulations, tell the consumer what information the licensee needs in order to be able to prepare the Key Facts Sheet.
Civil penalty: 5,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
Defence for subsections 133AD(2) and (3)
(4) For the purposes of applying subsections 133AD(2) and (3) to a failure by a licensee to provide a Key Facts Sheet to a consumer, it is a defence if:
(a) the licensee has, in accordance with subsection (2) of this section, told the consumer what information the licensee needs in order to be able to prepare the Key Facts Sheet; and
(b) the consumer has not provided that information to the licensee.
Note: For the purpose of subsection 133AD(3), a defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code).
133AF Defences to obligation to provide a Key Facts Sheet
(1) For the purpose of applying subsection 133AD(2) or (3) to a failure by a licensee to provide a consumer with a Key Facts Sheet (the new Key Facts Sheet) for a standard home loan, it is a defence if:
(a) the following conditions are satisfied:
(i) the licensee has previously provided the consumer with a Key Facts Sheet (the previous Key Facts Sheet) for the standard home loan;
(ii) the new Key Facts Sheet would be the same (except for its date) as the previous Key Facts Sheet; or
(b) the licensee reasonably believes that:
(i) another person has previously provided the consumer with a Key Facts Sheet (the previous Key Facts Sheet) for the standard home loan; and
(ii) the new Key Facts Sheet would be the same (except for its date) as the previous Key Facts Sheet; or
(c) the licensee reasonably believes that the consumer would not be eligible for the standard home loan; or
(d) under regulations made for the purpose of subsection (2), the licensee is not required to provide the consumer with the new Key Facts Sheet.
Note: For the purpose of subsection 133AD(3), a defendant bears an evidential burden in relation to the matters in this subsection (see subsection 13.3(3) of the Criminal Code).
(2) The regulations may prescribe circumstances in which a licensee is not required to provide a consumer with a Key Facts Sheet for a standard home loan.
Part 3‑2B—Licensees that are credit providers under credit contracts: additional rules relating to credit card contracts
Division 1—Introduction
133B Guide to this Part
This Part has rules that apply to licensees that are credit providers under credit card contracts. It applies in addition to the general rules in Part 3‑2.
Division 2 defines key concepts used in this Part (including credit card contract and credit card).
Division 3 imposes requirements aimed at ensuring a consumer obtains a Key Facts Sheet before entering into a credit card contract.