What it does
The Pawnbrokers and Second-hand Dealers Act 1996 (the Act) establishes a comprehensive licensing and conduct regime for two closely related but distinct activities: pawnbroking and dealing in second-hand goods. At its core, the Act prohibits unlicensed operation. Section 6 makes it an offence (maximum 100 penalty units) for any person to carry on a business of lending money on the security of pawned goods except under a licence. Section 7 imposes the same prohibition and penalty on carrying on a business of buying or selling second-hand goods. “Second-hand goods” are defined in s 3(1) as goods of a prescribed class that have been used or are represented as previously purchased but unused. “Pawnbroker” receives an extended definition in the inserted s 3A, which looks to the substance of the transaction rather than its form: goods are pawned if taken into possession as security for a loan, having regard to the borrower’s ordinary understanding (s 3A(3)(b)) and even if a mortgage also arises (s 3A(3)(d)). The regulations may further deem certain takings of possession to be (or not to be) pawning (s 3A(4)).
The Act then imposes operational controls. Licensees must obtain and verify identity and title evidence before accepting goods (s 15), using prescribed documentary and additional evidence (s 15(1A)–(1B)). They must keep transaction records for three years in a form that is readily producible to an authorised officer and in English (s 16(4)–(5)), including details of employees (s 16(2)). Market promoters face parallel obligations under ss 15A and 16(3). Suspicious goods, especially those with obliterated unique identifiers, must be reported immediately (s 19(1)–(2)).
For pawnbrokers, Part 4 adds granular rules. A compliant record (including serial numbers, hallmarks, interest rate, equivalent annual rate and itemised fees) must be signed by the pawnor at the time of pawning; otherwise the pledge is invalid (s 28(3)). A pawn ticket incorporating prescribed rights information and an itemised fees statement must be issued (s 28(5)–(5A)). Redemption is available for at least three months, or longer by agreement, and even after expiry until sale (s 29(1)–(2)). Agreements extending the redemption period must themselves comply with signed-record and identity-verification requirements (s 29A). Unredeemed goods where the principal exceeded the prescribed amount must be sold so as to realise the best price reasonably obtainable, ordinarily by auction (s 30(1)). Surplus proceeds (defined in s 3(1) by deducting principal, interest, disclosed fees and sale costs) must be paid to the pawnor if claimed within 12 months, and a notice of entitlement must generally be sent within 21 days (ss 31–31A). Interest may not be charged after the redemption period, and safekeeping fees may not increase (s 32B). Pawnbrokers are prohibited from purchasing their own pawned goods (s 32).