(10B) If the credit contract is a low cost credit contract, and statements of account are not required to be given because of paragraph 33(3)(g), then the contract document must contain the information (if any) prescribed by the regulations for the purposes of this subsection.
Default rate
(11) The contract document must contain:
(a) if the contract is a contract under which a default rate of interest may be charged when payments are in default—a statement to that effect and the default rate and how it is to be applied; and
(b) if the default rate under the contract is determined by referring to a reference rate:
(i) the name of the rate or a description of it; and
(ii) the margin or margins (if any) above or below the reference rate to be applied to determine the default rate; and
(iii) when and where the reference rate is published or, if it is not published, how the debtor may ascertain the rate; and
(iv) the current default rate.
Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
Enforcement expenses
(12) The contract document must contain a statement that enforcement expenses may become payable under the credit contract or mortgage (if any) in the event of a breach.
Mortgage or guarantee
(13) The contract document must contain:
(a) if any mortgage or guarantee is to be or has been taken by the credit provider—a statement to that effect; and
(b) in the case of a mortgage—a description of the property subject to, or proposed to be subject to, the mortgage, to the extent to which it is ascertainable.
Commission
(14) If a commission is to be paid by or to the credit provider for the introduction of credit business or business financed by the contract, the contract document must contain:
(a) a statement of that fact; and
(b) the person by whom the commission is payable; and
(c) the person to whom the commission is payable; and
(d) the amount if ascertainable.
Commission does not include fees payable by a supplier under a merchant service agreement with a credit provider, an amount payable in connection with a credit‑related insurance contract or commission paid to employees of the credit provider.
Insurance financed by contract
(15) If the credit provider knows that the debtor is to enter into a credit‑related insurance contract and that the insurance is to be financed under the credit contract, the contract document must contain:
(b) the amount payable to the insurer or, if it is not ascertainable, how it is calculated; and
(c) the kind of insurance and any other particulars that may be prescribed by the regulations; and
(d) if the credit provider knows of any commission to be paid by the insurer for the introduction of the insurance business—a statement that it is to be paid and, if ascertainable, the amount of the commission expressed either as a monetary amount or as a proportion of the premium.
In the case of consumer credit insurance that includes a contract of general insurance within the meaning of the Insurance Contracts Act 1984:
(e) it is sufficient compliance with paragraphs (a) and (b) if the contract document contains the name of the general insurer and the total amount payable to the insurers (or, if it is not ascertainable, how it is calculated); and
(f) it is sufficient compliance with paragraph (d) relating to the amount of commission if the contract document contains the total amount of commission (expressed as a monetary amount or as a proportion of the premium) to be paid by the insurers.
Note: A penalty may be imposed for contravention of a key requirement in paragraph (a) or (b): see Part 6.
Provisions for person other than debtor to occupy reverse mortgaged property
(15A) If the credit contract for a reverse mortgage is to make provision for a person other than the debtor to occupy the reverse mortgaged property, the contract document must contain provisions that have the following effect (whether or not the document also contains other provisions relating to such occupation by such a person):
(a) the debtor may at any time (before, when or after the contract is made):
(i) nominate to the credit provider a person who is to be allowed to occupy the property (whether alone or with other persons); and
(ii) revoke such a nomination by notice given to the credit provider;
(b) while a nomination described in paragraph (a) is in force, the nominated person has the same rights (against the credit provider) to occupy the property as the debtor has or would have apart from the death of the debtor or vacation of the property by the debtor.
Note: Other provisions contained in the contract document may, for example, limit the kinds of persons whom the debtor may nominate to the credit provider as persons who are to be allowed to occupy the property.
Elections relating to low cost credit contracts
(15B) If:
(a) the credit contract is a low cost credit contract; and
(b) the credit provider has made an election under subsection 133BXA(1) of the National Credit Act that covers the contract, and the election is in force;
then the contract document must contain a statement that the credit provider has made such an election.
Other information
(16) The contract document must contain any information or warning required by the regulations.
Note: Sections 180 to 182 set out the tolerances and assumptions applicable to matters required to be disclosed.
18 Form and expression of contract document
The contract document must conform to the requirements of the regulations as to its form and the way it is expressed and, subject to any such requirements, may consist of one or more separate documents.
18A Provisions that must not be included in credit contract for reverse mortgage
(1) A credit provider must not enter into a credit contract for a reverse mortgage that provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).
(2) A credit provider must not agree to change, or unilaterally change, a credit contract for a reverse mortgage so that it provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).
(3) For the purposes of subsections (1) and (2), the events are as follows:
(a) the debtor failing to inform the credit provider that another person occupies the reverse mortgaged property;
(b) the debtor failing, when the debtor occupies the reverse mortgaged property, to give the credit provider evidence that the debtor, or another person nominated by the debtor to the credit provider, occupies or occupied the reverse mortgaged property;
(c) the debtor leaving the reverse mortgaged property unoccupied while it is the debtor’s principal place of residence;
(d) the debtor failing to pay a cost to a person other than the credit provider within 3 years after the payment became due;
(e) the debtor failing to comply with a provision of the credit contract if the contract does not make it clear how the debtor is to comply with the provision;
(f) the debtor breaching another credit contract with the credit provider;
(g) an event that involves an act or omission by the debtor and is prescribed by the regulations.
18B Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor
(1) This section applies if a proposed credit contract for a reverse mortgage does not include a provision (a tenancy protection provision) for a person other than the debtor to have a right against the credit provider to occupy the reverse mortgaged property.
(2) A person must not provide a credit service relating to the contract unless the person has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.
Criminal penalty: 50 penalty units.
(3) Subsection (2) does not apply if the person is or will be the credit provider under the contract.
(4) The credit provider must not enter into the contract unless the credit provider has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.
Criminal penalty: 50 penalty units.
(5) An offence against subsection (2) or (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
18C Independent legal advice before entry into credit contract for reverse mortgage
(1) The regulations may regulate or prohibit the entry by a credit provider into a credit contract for a reverse mortgage if the debtor has not obtained legal advice, in accordance with the regulations, about the contract or reverse mortgage.
(2) The regulations may provide for offences and civil penalties for contraventions of regulations made for the purposes of subsection (1).
(3) The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 500 penalty units for a body corporate.
(4) The civil penalty for a contravention of a regulation made for the purposes of subsection (1) by an individual is 5,000 penalty units. However, section 167B of the National Credit Act applies in the same way as it would apply if the regulation contravened were a civil penalty provision under that Act.
19 Alteration of contract document
(1) An alteration of (including an addition to) a new contract document by the credit provider after it is signed by the debtor is ineffective unless the debtor has agreed in writing to the alteration.
(2) This section does not apply to an alteration having the effect of reducing the debtor’s liabilities under the credit contract.
20 Copy of contract for debtor
(1) If a contract document is to be signed by the debtor and returned to the credit provider, the credit provider must give the debtor a copy to keep.
(2) A credit provider must, not later than 14 days after a credit contract is made, give a copy of the contract in the form in which it was made to the debtor.
(3) Subsection (2) does not apply if the credit provider has previously given the debtor a copy of the contract document to keep.
21 When debtor may terminate contract
(1) Although a credit contract has been made, the debtor may nevertheless, by written notice to the credit provider, terminate the contract unless:
(a) any credit has been obtained under the contract; or
(b) a card or other means of obtaining credit provided to the debtor by the credit provider has been used to acquire goods or services for which credit is to be advanced under the contract.
(2) Nothing in this section prevents the credit provider from retaining or requiring payment of fees or charges incurred before the termination and which would have been payable under the credit contract.
22 Offence for noncompliance
(1) A credit provider must not:
(a) enter into a credit contract that contravenes a requirement of this Division; or
(b) otherwise contravene a requirement of this Division.
Criminal penalty: 100 penalty units.
(2) Subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) Subsection (1) does not apply to a contravention of a requirement of section 18B.
Division 2—Debtor’s monetary obligations
23 Prohibited monetary obligations—general
(1) A credit contract (other than a small amount credit contract) must not impose a monetary liability on the debtor:
(a) in respect of a credit fee or charge prohibited by this Code; or
(b) in respect of an amount of a fee or charge exceeding the amount that may be charged consistently with this Code; or
(c) in respect of an interest charge under the contract exceeding the amount that may be charged consistently with this Code.
Note 1: A penalty may be imposed for contravention of a key requirement in this subsection, but only at the time the credit contract is entered into: see Part 6.
Note 2: This subsection also applies to liabilities imposed contrary to section 133BI of the National Credit Act: see subsection (7) of that section.
Civil effect
(2) Any provision of a credit contract that imposes a monetary liability prohibited by subsection (1) is void to the extent that it does so. If an amount that is prohibited by subsection (1) is paid, it may be recovered.
(3) A credit fee or charge cannot be charged in respect of a credit contract unless the contract authorises it to be charged.
Civil effect
(4) If an amount that is prohibited by subsection (3) is paid, it may be recovered.
(1) A small amount credit contract must not impose a monetary liability on the debtor:
(a) in respect of an interest charge (including a default rate of interest) under the contract; or
(b) in respect of a fee or charge prohibited by this Code; or
(c) in respect of an amount of a fee or charge exceeding the amount that may be charged consistently with this Code.
(2) If a provision of a small amount credit contract imposes a monetary liability prohibited by subsection (1) then:
(a) each provision (the void provisions) of the contract that imposes a monetary liability of a kind referred to in that subsection (whether or not the liability is imposed consistently with this Code) is void to the extent that the provision relates to the liability; and
(b) the debtor may recover as a debt due to the debtor any amount paid to the credit provider under the void provisions to the extent that the amount relates to the liability.
24 Offences related to prohibited monetary obligations—credit providers
(1) A credit provider must not:
(a) enter into a credit contract on terms imposing a monetary liability prohibited by subsection 23(1); or
(b) require or accept payment of an amount in respect of a monetary liability that cannot be imposed consistently with this Code.
Civil penalty: 5,000 penalty units.
(1A) A credit provider must not:
(a) enter into a small amount credit contract on terms imposing a monetary liability prohibited by subsection 23A(1); or
(b) require or accept payment of an amount in respect of a monetary liability that cannot be imposed consistently with this Code.
Civil penalty: 5,000 penalty units.
Offence
(2) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1) or (1A); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
24A Offences related to prohibited monetary obligations—credit assistance providers
(1) A person must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply for a particular small amount credit contract with a particular credit provider; or
(b) assisting the consumer to apply for a particular small amount credit contract with a particular credit provider;
if the person knows, or is reckless as to whether, the contract will contravene subsection 23A(1).
Criminal penalty: 50 penalty units.
(2) If a person provides credit assistance to a consumer that is prohibited by subsection (1):
(a) the consumer is not liable (and is taken never to have been liable) to pay any fees or charges to the person in relation to:
(i) the credit assistance; or
(ii) any other services provided by the person in connection with the credit assistance; and
(b) the consumer may recover as a debt due to the consumer the amount of any such fees or charges paid by the consumer to the person.
25 Loan to be in money or equivalent
(1) A credit provider must not under a credit contract pay an amount to or in accordance with the instructions of the debtor unless the payment is in cash or money’s worth and is made in full without deducting an amount for interest charges under the contract.
Criminal penalty: 100 penalty units.
(2) Subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) The regulations may provide that subsection (1) does not apply to the deduction of an amount for the first payment of interest charges under the contract.
26 Early payments and crediting of payments
(1) A credit provider must accept any payment under a credit contract that is made before it is payable under the contract unless the contract prohibits its early payment.
Criminal penalty: 100 penalty units.
(2) A credit provider must credit each payment made under a credit contract to the debtor as soon as practicable after receipt of the payment.
Criminal penalty: 100 penalty units.
(3) Subsections (1) and (2) are offences of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(4) Despite subsection (2), a credit provider is not required to credit a payment under a credit contract before it is payable under the contract if the contract prohibits its early payment and:
(a) the credit provider informs the debtor, as soon as practicable after the credit provider becomes aware of the payment, that it will not be credited to the debtor (or that any credit will be reversed) until it becomes payable under the contract, and the debtor elects to leave the payment with the credit provider; or
(b) the credit provider informs the debtor, before accepting the payment, that it will not be credited to the debtor until it becomes payable under the contract; or
(c) the credit provider refunds the payment to the debtor.
(5) A credit contract may not, under this section, prohibit the paying out of the contract at any time under section 82.
(6) A credit contract for a reverse mortgage may not prohibit an early payment that:
(a) is made in the circumstances described in paragraph 86A(1)(a); and
(b) is of the amount described in paragraph 86A(1)(b).
26A Regulations about residential investment property