(6) This Code does not apply to any part of a credit contract under which both credit and debit facilities are available to the extent that the contract or any amount payable or other matter arising out of it relates only to the debit facility.
Bill facilities
(7) This Code applies to the provision of credit arising out of a bill facility, that is, a facility under which the credit provider provides credit by accepting, drawing, discounting or endorsing a bill of exchange or promissory note. However, it does not apply if:
(a) the credit is provided by an authorised deposit‑taking institution (within the meaning of subsection 5(1) of the Banking Act 1959); or
(b) the regulations provide that the Code does not apply to the provision of all or any credit arising out of such a facility.
Insurance premiums by instalments
(8) This Code does not apply to the provision of credit by an insurer for the purpose of the payment to the insurer of an insurance premium by instalments, even though the instalments exceed the total of the premium that would be payable if the premium were paid in a lump sum, if on cancellation the insured would have no liability to make further payments under the contract.
Pawnbrokers
(9) This Code does not apply to the provision of credit on the security of pawned or pledged goods by a pawnbroker in the ordinary course of a pawnbroker’s business (being a business which is being lawfully conducted by the pawnbroker) as long as it is the case that, if the debtor is in default, the pawnbroker’s only recourse is against the goods provided as security for the provision of the credit. However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.
Trustees of estates
(10) This Code does not apply to the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate. However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.
Employee loans
(11) This Code (other than this Part, Part 4, Division 3 of Part 5, Divisions 4 and 5 of Part 7 and Parts 12, 13 and 14) does not apply to the provision of credit by an employer, or a related body corporate within the meaning of the Corporations Act 2001 of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person). However, for a credit provider that provides credit to which this Code applies in the course of a business of providing credit to which this Code applies to employees or former employees and to others, this subsection applies only to the provision of credit on terms that are more favourable to the debtor than the terms on which the credit provider provides credit to persons who are not employees or former employees of the credit provider or a related body corporate.
(12) This Code does not apply to the provision of credit by way of a margin loan (within the meaning of subsection 761EA(1) of the Corporations Act 2001).
Regulations may exclude credit
(13) The regulations may exclude, from the application of this Code, the provision of credit of a class specified in the regulations. In particular (but without limiting the generality of the foregoing), the regulations may so exclude the provision of credit if the amount of the credit exceeds or may exceed a specified amount or if the credit is provided by a credit provider of a specified class.
ASIC may exclude credit
(14) ASIC may exclude, from the application of this Code, a provision of credit specified by ASIC.
(15) Without limiting subsection (14), ASIC may exclude a provision of credit if:
(a) the amount of the credit exceeds, or may exceed, a specified amount; or
(b) the credit is provided by a specified credit provider.
(16) An exemption under subsection (14) is not a legislative instrument.
(17) ASIC may, by legislative instrument, exclude from the application of this Code, the provision of credit of a class specified in the instrument.
(18) Without limiting subsection (17), ASIC may exclude a provision of credit if:
(a) the amount of the credit exceeds, or may exceed, a specified amount; or
(b) the credit is provided by a specified credit provider, or a class of credit providers.
Definitions
(19) In this section:
fee or charge does not include a government fee, charge or duty of any kind.
security, of pawned or pledged goods, means security by way of bailment of the goods under which the title to the goods does not pass, conditionally or unconditionally, to the bailee.
7 Mortgages to which this Code applies
(1) This Code applies to a mortgage if:
(a) it secures obligations under a credit contract or a related guarantee; and
(b) the mortgagor is a natural person or a strata corporation.
(2) If any such mortgage also secures other obligations, this Code applies to the mortgage to the extent only that it secures obligations under the credit contract or related guarantee.
(3) The regulations may exclude, from the application of all or any provisions of this Code, a mortgage of a class specified in the regulations.
8 Guarantees to which this Code applies
(1) This Code applies to a guarantee if:
(a) it guarantees obligations under a credit contract; and
(b) the guarantor is a natural person or a strata corporation.
(2) If any such guarantee also guarantees other obligations, this Code applies to the guarantee to the extent only that it guarantees obligations under the credit contract.
(3) The regulations may exclude, from the application of all or any provisions of this Code, a guarantee of a class specified in the regulations.
9 Goods leases with option to purchase to be regarded as sale by instalments
(1) For the purposes of this Code, a contract for the hire of goods under which the hirer has a right or obligation to purchase the goods, is to be regarded as a sale of the goods by instalments if the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so) exceeds the cash price of the goods.
Note: A contract includes a series of contracts, or contracts and arrangements (see Part 13).
(2) A debt is to be regarded as having been incurred, and credit provided, in such circumstances.
(3) Accordingly, if because of subsection 5(1) the contract is a credit contract, this Code (including Part 6) applies as if the contract had always been a sale of goods by instalments, and for that purpose:
(a) the amounts payable under the contract are the instalments; and
(b) the credit provider is the person who is to receive those payments; and
(c) the debtor is the person who is to make those payments; and
(d) the property of the supplier in the goods passes under the contract to the person to whom the goods are hired on delivery of the goods or the making of the contract, whichever occurs last; and
(e) the charge for providing the credit is the amount by which the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so), exceeds the cash price of the goods; and
(f) a mortgage containing the terms and conditions set out in the regulations is taken to have been entered into in writing between the person to whom the goods are hired under the contract and the supplier as security for payment to the supplier of the amount payable to the supplier by the person to whom the goods are hired under the contract; and
(g) any provision in the contract for hiring by virtue of which the supplier is empowered to take possession, or dispose, of the goods to which the contract relates is void.
(4) For the purposes of this section, the amount payable under the contract includes any agreed or residual value of the goods at the end of the hire period or on termination of the contract, but does not include the following amounts:
(a) any amount payable in respect of services that are incidental to the hire of goods under the contract;
(b) any amount that ceases to be payable on the termination of the contract following the exercise of a right of cancellation by the hirer at the earliest opportunity.
Note: Part 11 (Consumer leases) applies to the contracts specified in that Part for the hire of goods under which the hirer does not have a right or obligation to purchase the goods.
10 Deciding application of Code to particular contracts for the sale of land by instalments
(1) This section applies to an executory contract for the sale of land if:
(a) under the contract, the purchaser:
(i) is entitled to enter into possession of the land before becoming entitled to receive a conveyance or transfer of the land; and
(ii) is bound to make a payment or payments (other than a deposit or rent payment) to, or in accordance with the instructions of, the vendor without becoming entitled to receive a conveyance or transfer of the land in exchange for the payment or payments; and
(b) the amount payable to purchase the land under the contract exceeds the cash price of the land.
Note: Cash price is defined in Part 13 in terms of goods or services. Services is defined in Part 13 to include rights in relation to, and interests in, real property.
(2) For the purpose of deciding whether the contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it:
(a) a debt is to be regarded as having been incurred, and credit provided, in the circumstances mentioned in subsection (1); and
(b) the debtor is the purchaser under the contract; and
(c) the credit provider is the vendor under the contract; and
(d) the charge for providing the credit is the amount by which the amount payable to purchase the land, together with any other amount payable under the contract other than outgoings for the land, exceeds the cash price of the land.
(3) This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.
(4) In this section:
deposit, in relation to a contract, means an amount:
(a) not exceeding 10% of the amount payable to purchase the land under the contract; and
(b) paid or payable in one or more amounts; and
(c) liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser.
outgoings includes rates, water charges and house and contents insurance.
rent payment, under a contract, means a payment:
(a) made by the purchaser to the vendor in exchange for possession of the land before becoming entitled to receive a conveyance or transfer of the land; and
(b) that is not deductible from the amount payable to purchase the land.
11 Deciding application of Code to particular contracts for the sale of goods by instalments
(1) This section applies to a contract for the sale of goods if the amount payable to purchase the goods under the contract:
(a) is payable by instalments; and
(b) exceeds the cash price of the goods.
(2) This section does not apply to a contract for the hire of goods even if the hirer has a right or obligation to purchase the goods.
(3) For the purpose of deciding whether the contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it:
(a) a debt is to be regarded as having been incurred, and credit provided, in the circumstances mentioned in subsection (1); and
(b) the debtor is the person who is to make the payments; and
(c) the credit provider is the person who is to receive the payments; and
(d) the charge for providing the credit is the amount by which the amount payable to purchase the goods, together with any other amount payable under the contract, exceeds the cash price of the goods.
(4) This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.
12 Deciding application of Code to particular contracts for the sale of goods by instalments under related contracts
(1) For the purpose of this section, a contract is a related contract to a contract for the sale of goods (the goods contract) if:
(a) the sale of goods is financed, wholly or partly, by the provision of credit under the contract; and
(b) the credit provider under the contract is:
(i) the supplier of goods under the goods contract; or
(ii) a related body corporate within the meaning of the Corporations Act 2001 of the supplier of the goods under the goods contract; and
(c) the amount payable under the contract is payable by instalments.
(2) For the purpose of deciding whether a related contract to a goods contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it, the charge for providing the credit is the amount by which the amount payable to purchase the goods, together with any other amount payable under the related contract, exceeds the cash price of the goods.
(3) This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.
13 Presumptions relating to application of Code
(1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.
(2) It is presumed for the purposes of this Code that credit is not provided or intended to be provided under a contract wholly or predominantly for any or all of the following purposes (a Code purpose):
(a) for personal, domestic or household purposes;
(b) to purchase, renovate or improve residential property for investment purposes;
(c) to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes;
if the debtor declares, before entering the contract, that the credit is to be applied wholly or predominantly for a purpose that is not a Code purpose, unless the contrary is established.
(3) However, the declaration is ineffective if, when the declaration was made, the credit provider or a person (the prescribed person) of a kind prescribed by the regulations:
(a) knew, or had reason to believe; or
(b) would have known, or had reason to believe, if the credit provider or prescribed person had made reasonable inquiries about the purpose for which the credit was provided, or intended to be provided, under the contract;
that the credit was in fact to be applied wholly or predominantly for a Code purpose.
(4) If the declaration is ineffective under subsection (3), paragraph 5(1)(b) is taken to be satisfied in relation to the contract.
(5) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not.
(6) A person commits an offence if:
(a) the person engages in conduct; and
(b) the conduct induces a debtor to make a declaration under this section that is false or misleading in a material particular; and
(c) the declaration is false or misleading in a material particular.
Criminal penalty: 2 years imprisonment.
(7) Strict liability applies to paragraph (6)(c).
Note: For strict liability, see section 6.1 of the Criminal Code.
13A Reverse mortgages
(1) For the purposes of this Code, an arrangement is a reverse mortgage if the arrangement involves a credit contract, except a bridging finance contract, and a mortgage over a dwelling or land securing a debtor’s obligations under the contract and either:
(a) the conditions in subsections (2) and (3) are met; or
(b) the arrangement is of a kind declared by ASIC under subsection (4) and is made on or after the commencement of that declaration.
Conditions
(2) The first condition is that the debtor’s total liability under the credit contract or mortgage may exceed (to a limited or unlimited extent) the maximum amount of credit that may be provided under the contract without the debtor being obliged to reduce that liability to or below that maximum amount.
Note: The debtor’s total liability can exceed the maximum amount of credit because interest and some other fees and charges are not included in an amount of credit: see subsection 3(2).
(3) The second condition is that, if the regulations prescribe any prerequisites for the arrangement to be a reverse mortgage, those prerequisites are met.
Declarations by ASIC
(4) ASIC may by legislative instrument declare specified kinds of arrangements involving a credit contract and a mortgage over a dwelling or land securing a debtor’s obligations under the contract to be reverse mortgages.
Part 1A—Extending the application of this Code
13B Application of this Code to buy now pay later contracts
Application of this Code apart from this section
(1) This Code applies to the provision of credit under a buy now pay later contract (and to the buy now pay later contract and related matters) if, apart from this section, the Code applies to the provision of credit under the buy now pay later contract (and to the buy now pay later contract and related matters).
Note: For when this Code applies in relation to a buy now pay later contract apart from this section, see sections 5, 6 and 13C. Section 13C deals with low cost credit contracts, including low cost credit contracts that are buy now pay later contracts.
Extending the application of this Code
(2) In addition, this Code applies to the provision of credit under a buy now pay later contract (and to the buy now pay later contract and related matters) if:
(a) the credit provider, or the debtor, under the buy now pay later contract is a constitutional corporation; and