(1) This section applies when determining, for the purposes of subsection 131(1), whether a low cost credit contract will be unsuitable for a consumer under paragraph 131(2)(b) if the contract is entered, or the credit limit of the contract is increased, in the period covered by the assessment mentioned in subsection 131(1).
Note: This section does not affect whether a low cost credit contract will be unsuitable for a consumer under paragraph 131(2)(a) or (c).
Entering a low cost credit contract
(2) For the purpose of applying subsection 131(1) in relation to a licensee entering a low cost credit contract (the initial contract) with a consumer, if the credit limit of the initial contract, at the time the initial contract is entered, will be less than or equal to the threshold amount, then it is presumed (unless the contrary is proved) that the initial contract will not be unsuitable for the consumer under paragraph 131(2)(b) if the initial contract is entered in the period covered by the assessment.
(3) However, subsection (2) does not apply if:
(a) the licensee satisfies paragraph 128(c) in relation to entering the initial contract by making an assessment that would satisfy that paragraph in relation to entering a larger contract with the consumer (see subsection 133BXD(2)); and
(b) the credit limit of the larger contract is greater than the threshold amount.
Increasing the credit limit of a low cost credit contract
(4) For the purpose of applying subsection 131(1) in relation to an increase (the relevant increase) made by a licensee to the credit limit of a low cost credit contract (the initial contract) with a consumer, if the credit limit of the initial contract after the increase will be less than or equal to the threshold amount, then it is presumed (unless the contrary is proved) that the initial contract will not be unsuitable for the consumer under paragraph 131(2)(b) if the relevant increase occurs during the period covered by the assessment.
(5) However, subsection (4) does not apply if:
(a) the licensee previously satisfied paragraph 128(c) in relation to entering the initial contract by making an assessment that would have satisfied that paragraph in relation to entering a larger contract with the consumer (see subsection 133BXD(2)); and
(b) the credit limit of the larger contract was greater than the threshold amount; and
(c) because of subsection 133BXD(4), the licensee is not required to make a new assessment in order to satisfy paragraph 128(c) into relation to the relevant increase.
Definitions
(6) In this section:
larger contract means a low cost credit contract that:
(a) has a credit limit that is greater than the credit limit of the initial contract when the initial contract is entered; and
(b) has terms that are otherwise substantially the same as the terms of the initial contract when the initial contract is entered.
threshold amount means:
(a) $2,000, unless paragraph (b) applies; or
(b) if the regulations prescribe another dollar amount (whether larger or smaller) for the purposes of this paragraph—that other dollar amount.
133BXF Prohibition on entering unsuitable low cost credit contracts etc.—presumptions where credit limit of contract not above threshold amount
(1) This section applies when determining, for the purposes of subsection 133(1), whether a low cost credit contract is unsuitable for a consumer under paragraph 133(2)(b).
Note: This section does not affect whether a low cost credit contract is unsuitable for a consumer under paragraph 133(2)(a) or (c).
Entering a low cost credit contract
(2) For the purpose of applying subsection 133(1) in relation to a licensee entering a low cost credit contract with a consumer, if the credit limit of the contract, at the time the contract is entered, is less than or equal to the threshold amount, then it is presumed (unless the contrary is proved) that the contract is not unsuitable for the consumer under paragraph 133(2)(b).
Increasing the credit limit of a low cost credit contract
(3) For the purpose of applying subsection 133(1) in relation to an increase made by a licensee to the credit limit of a low cost credit contract with a consumer, if the credit limit of the contract after the increase is less than or equal to the threshold amount, then it is presumed (unless the contrary is proved) that the contract is not unsuitable for the consumer under paragraph 133(2)(b).
Definitions
(4) In this section:
threshold amount means:
(a) $2,000, unless paragraph (b) applies; or
(b) if the regulations prescribe another dollar amount (whether larger or smaller) for the purposes of this paragraph—that other dollar amount.
Division 3—Unsuitability assessment policies
133BXG Licensee must have an unsuitability assessment policy
(1) A licensee must have a written policy (an unsuitability assessment policy) that sets out how the licensee will comply with sections 128 and 131 (which deal with assessments of unsuitability), as those sections apply in relation to low cost credit contracts.
Unsuitability assessment policy must be effective
(2) The licensee must ensure that the licensee’s unsuitability assessment policy is one that, if followed, makes it likely that the licensee will comply with sections 128 and 131, as those sections apply in relation to low cost credit contracts.
Regulations may prescribe further requirements
(3) The licensee must comply with any requirements relating to unsuitability assessment policies prescribed by the regulations for the purposes of this subsection.
Part 3‑2C—Licensees that are credit providers under credit contracts: additional rules relating to short‑term and small amount credit contracts
Division 1—Introduction
133C Guide to this Part
This Part has rules that apply to licensees who are, or are to be, credit providers under short‑term credit contracts and small amount credit contracts. It applies in addition to the general rules in Part 3‑2.
Division 2 prohibits a licensee from entering into, or increasing the credit limit of, short‑term credit contracts. It also imposes requirements on a licensee who makes representations about entering into small amount credit contracts and prohibits a licensee from entering into, or offering to enter into, small amount credit contracts in certain circumstances. Division 2 imposes requirements in relation to recording the assessment that a small amount credit contract is not unsuitable and prohibits a licensee from making certain unsolicited communications in relation to small amount credit contracts. It also provides that the consumer is not liable to pay certain fees and charges under small amount credit contracts in certain circumstances.
Division 2—Short‑term and small amount credit contracts
133CA Prohibition on entering, or increasing the credit limit of, short‑term credit contracts
Prohibition
(1) A licensee must not:
(a) enter a short‑term credit contract with a consumer who will be the debtor under the contract; or
(b) increase the credit limit of a short‑term credit contract with a consumer who is the debtor under the contract.
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.
133CB Licensee who makes representations in relation to small amount credit contracts must display and give information
Requirement
(1) If a licensee represents that the licensee enters into, or is able to enter into, small amount credit contracts with consumers under which the licensee would be the credit provider, 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 a 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.
133CC Licensee must not enter into a small amount credit contract if the repayments do not meet the prescribed requirements
Requirement
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if the repayments that would be required under the contract would not meet the requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
Note: For example, the regulations may provide that the amount of a repayment must not exceed a specified percentage of the consumer’s income.
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.
Loss of certain fees and charges
(3) If a licensee enters into a small amount credit contract in contravention of subsection (1), then:
(a) the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of a kind mentioned in paragraph 31A(1)(a), (b), (c) or (d) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
(b) the consumer may recover as a debt due to the consumer any amounts paid by the consumer that, in accordance with paragraph (a) of this subsection, the consumer is not liable to pay (or is taken never to have been liable to pay).
133CD Licensee must not enter into a small amount credit contract if repayment amounts and intervals are not equal
Requirement
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if any of the following applies:
(a) repayments that would be required under the contract are not equal;
(b) the intervals between repayment dates would not be equal;
(c) the interval between the date on which credit would be first provided under the contract and the first repayment date would be longer than twice the interval between the first repayment date and the second repayment date.
Civil penalty: 5,000 penalty units.
(2) For the purposes of paragraph (1)(a), repayments that would be required under a small amount credit contract are taken to be equal if:
(a) each repayment is of the same amount; or
(b) both of the following apply:
(i) each repayment (other than the last repayment) is the same amount;
(ii) the last repayment is up to 5% less than each other repayment; or
(c) the repayments meet the conditions determined by ASIC under subsection (5).
(3) A repayment date in relation to a small amount credit contract is the date on or by which a repayment is required to be made under the contract.
(4) For the purposes of paragraph (1)(b), if a small amount credit contract provides that:
(a) repayments that would be required under the contract are to be made on or by a fixed day of each week, fortnight or month; and
(b) if that fixed day falls on a day that is not a business day—the repayment would be required to be made on or by the immediately preceding or succeeding business day;
the intervals between repayment dates are taken to be equal.
(5) ASIC may, by legislative instrument, determine conditions for the purposes of paragraph (2)(c).
(6) Nothing in this section is intended to limit the regulations which may be made for the purposes of section 133CC.
Offence
(7) 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: 100 penalty units.
Strict liability offence
(8) 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: 10 penalty units.
(9) Subsection (8) is an offence of strict liability.
133CE Written documentation required in relation to the assessment for a small amount credit contract
(1) If, in an assessment made for the purposes of paragraph 128(c), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before:
(a) entering into the small amount credit contract with the consumer; or
(b) making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter into the small amount credit contract with the licensee; or
(c) increasing the credit limit of the small amount credit contract which is the subject of that assessment; or
(d) making an unconditional representation to the consumer that the licensee considers that the credit limit of the small amount credit contract between the consumer and the licensee will be able to be increased;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(e) the assessment; and
(f) the inquiries and verification made for the purposes of paragraph 128(d) in relation to that assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(e) and (f) 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.
133CF Licensee not to make certain unsolicited communications in relation to a small amount credit contract
Prohibition on certain unsolicited communications
(1) A licensee must not make, or arrange for the making of, an unsolicited communication to a consumer (whether orally, in writing or by electronic means) that contains:
(a) an offer to the consumer to enter into a small amount credit contract; or
(b) an invitation to the consumer to apply for a small amount credit contract;
if any of the following apply:
(c) the consumer is, or has at any time been, a debtor under a small amount credit contract with the licensee;
(d) the consumer has at any time applied for a small amount credit contract with the licensee;
(e) the consumer:
(i) is, or has at any time been, a debtor under a small amount credit contract with another credit provider; or
(ii) has at any time applied for a small amount credit contract with another credit provider;
and a reasonable person in the licensee’s position would, if the person undertook such inquiries as are reasonable in the circumstances, be aware of the matter in subparagraph (i) or (ii) (whichever applies).
Civil penalty: 5,000 penalty units.
Meaning of unsolicited communication to a consumer
(2) An unsolicited communication to a consumer is a communication to a consumer or a consumer’s agent that is made by a person by dealing directly with the consumer or the consumer’s agent in any of the following circumstances:
(a) no prior request has been made by the consumer to the licensee for that communication;
(b) the consumer has made a prior request to the licensee for that communication and that request was solicited by or on behalf of the licensee;
(c) circumstances of a kind prescribed by the regulations.
However, the regulations may prescribe that specified kinds of communications are not unsolicited communications to which this section applies.
Offence
(3) 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: 100 penalty units.
Loss of certain fees and charges
(4) If:
(a) a licensee makes an unsolicited communication to a consumer in contravention of subsection (1); and
(b) the licensee enters into a small amount credit contract with that consumer within 30 days after that unsolicited communication is made;
then:
(c) the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of a kind mentioned in paragraph 31A(1)(a), (b), (c) or (d) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
(d) the consumer may recover as a debt due to the consumer any amounts paid by the consumer that, in accordance with paragraph (c) of this subsection, the consumer is not liable to pay (or is taken never to have been liable to pay).
Part 3‑2CA—Licensees supplying credit information to credit reporting bodies etc.
Division 1—Introduction
133CM Guide to this Part
This Part has rules that apply to licensees that are large ADIs or are of a prescribed kind.