Credit (Commonwealth Powers) Act 2010

The Act relies on several linked concepts that define the scope and limits of the referral.

Adoption (defined in s 3) means the act of taking the Commonwealth Acts as State law under s 4(1). This is not simply a reference; it is a direct incorporation of the Commonwealth Acts into WA law for constitutional purposes. The adoption applies to the “relevant version of the National Credit legislation” - the two Commonwealth Acts as they stood after the 2010 amendment Act. Critically, the definition of “National Credit legislation” in s 3 refers to those Acts “as in force from time to time”. However, the adoption in s 4(1) is limited to the “relevant version” (the original plus the 2010 amendments). This creates an asymmetry: the adopted text is frozen at a point in time, but the reference allows the Commonwealth to expressly amend that text. The amalgam is that WA law is the adopted text as subsequently amended by valid Commonwealth laws under the reference or under other powers.

Amendment reference (s 3) means the reference under s 6(1). It is limited to “express amendments” - defined in s 3 as direct textual changes by another Commonwealth Act or instrument. This excludes implied amendments, repeals by implication, or laws that affect credit without touching the text of the National Credit legislation. The reference also only covers “referred credit matter” - credit and consumer leases as defined. This is narrower than the full scope of the Commonwealth Acts, which also deal with things like credit reporting or licensing that might fall outside those definitions. The Commonwealth cannot use the reference to amend the Acts on matters outside “referred credit matter”, though it may still do so under its own powers.

Referred credit matter (s 3) uses the “relevant version of the National Credit Code” as a benchmark. That refers to Schedule 1 of the Commonwealth Act as originally enacted and as amended by the 2010 Act. The definition operates hypothetically: a matter relates to credit if it would be covered by the expression “provision of credit to which this Code applies” in that Code version. This is a dynamic reference to a fixed version of the Code - it does not incorporate later amendments to the Code’s scope.

Exclusions (s 7) carve out four categories from the reference: State taxes, general land recording systems, priorities in real property, and laws that limit or exclude State law about State statutory rights. These preserve core areas of State sovereignty. The definition of “State statutory right” is itself qualified - it does not include rights relating to credit or consumer leases. So a State licence to lend or a lease right granted under State law is not excluded, meaning the Commonwealth could potentially override those. But the blanket exclusion of State taxes (stamp duty, mortgage duty, etc.) ensures the Commonwealth cannot use the reference to impose or regulate State tax collection.

Commonwealth Credit instrument (s 3) includes any instrument made under the National Credit legislation, whether legislative or not. Section 9(c) confirms such instruments can affect the operation of the legislation without being express amendments. This means regulations, standards, or class orders can change the practical effect of the law without needing a new reference.

Termination (ss 5 and 8) allows the Governor to end the adoption or the amendment reference by proclamation. A termination can be revoked before the fixed day, but cannot be revoked afterwards. Section 10(3) allows a termination proclamation to carve out specific amendments from the savings provision, meaning the State could decide to sunset certain future amendments when leaving the scheme. The power is absolute and unreviewable on its face; no legislative approval is required.

The Act directly affects several groups. First, the Western Australian Parliament and Executive: by enacting this law, the State consents to the Commonwealth occupying the field of consumer credit regulation, and the Governor holds a unilateral power to exit. Second, credit providers - banks, credit unions, finance companies, payday lenders, mortgage brokers - who must comply with the National Consumer Credit Protection Act and the National Credit Code as Commonwealth law applying in WA. Because the adoption and reference ensure uniform coverage, a credit provider cannot argue that its activities are outside Commonwealth power because it is not a constitutional corporation. The Act thus eliminates the coverage gap that existed when WA had its own Consumer Credit (Western Australia) Code under the repealed Consumer Credit (Western Australia) Act 1996.

Third, consumers who obtain credit or enter consumer leases in WA. Their rights and protections are governed by the national regime rather than a state-specific code. This includes responsible lending obligations, disclosure requirements, hardship provisions, and dispute resolution through the Australian Financial Complaints Authority. The change from state to national law was largely a shift in regulator (from the WA Consumer Credit Office to ASIC) and a harmonisation of rules, but subject to ongoing Commonwealth amendments.

Fourth, ASIC (the Australian Securities and Investments Commission) becomes the primary regulator for consumer credit in WA. The transitional provisions in the notes (from the companion Act) allow ASIC to take over proceedings pending under the old WA Code and provide for information sharing between the old state regulator (the CEO) and ASIC. ASIC’s enforcement powers under the Commonwealth Act apply fully.

Fifth, legal practitioners and compliance professionals must now navigate a Commonwealth Act that is amended from time to time by the Commonwealth Parliament, subject only to the constraints on what amendments can validly rely on the reference. They must also monitor any termination proclamations, which could create a sudden reversion to state law.

Sixth, state government departments and agencies that previously administered the WA credit regime: their functions are largely transferred to ASIC. The transitional provisions preserve some pending proceedings under the old Code but only until finalisation.

Businesses offering consumer leases (such as car financing through novated leases or rent-to-buy schemes) are brought within the national definition of “consumer lease” in Part 11 of the National Credit Code. The reference covers those leases, so they face the same regulatory requirements as credit products.

Small lenders and non-corporate lenders (e.g., sole traders lending money) are particularly affected because they may no longer have a state-based “out” from Commonwealth regulation. The Act ensures the Commonwealth can reach them even if they operate below the constitutional corporations threshold.

The Act itself imposes very few direct duties or rights. Its substantive effect is to incorporate and refer, so duties arise under the Commonwealth Acts. Key duties imported into WA include:

• Responsible lending duties (National Consumer Credit Protection Act, Ch 3): a credit provider must not enter into a credit contract if the consumer cannot meet the obligations without substantial hardship, and must make reasonable inquiries about the consumer’s financial situation.
• Disclosure duties: prescriptive information statements, comparison rates, and pre-contractual documents.
• Hardship obligations: consumers may request variations on grounds of hardship.
• Licensing: credit providers must hold an Australian credit licence from ASIC.
• Consumer lease duties: similar responsible lending and disclosure duties apply to leases covered by Part 11.

The Act does create one direct right for the State: the right to terminate the adoption or reference by proclamation (ss 5, 8). This is a sovereign right, but it cannot be exercised retroactively; the termination only takes effect on a future fixed day. The State also retains the right under s 7 to maintain its own tax systems and land title regimes free from Commonwealth interference via this referral.

The Act also preserves certain procedural rights. Under the transitional provisions (notes), parties to proceedings under the old WA Code that were pending on 1 July 2010 have those proceedings dealt with under the old WA legislation, not the new national regime. This avoids retrospective application and ensures the old law governs existing disputes.

The Act does not confer a right of action on consumers or credit providers against the State for any failure in the referral mechanism. It is a structural piece of cooperative federalism. A consumer cannot sue the WA government for failing to terminate the reference; the decision is entirely discretionary. Similarly, a credit provider cannot challenge a Commonwealth amendment on the basis that the reference was improperly used - that would be a constitutional question about the scope of the reference. Section 9 makes clear that the State intends Commonwealth amendments to be valid whether based on the reference or on other powers. This limits the ability to argue that an amendment exceeds the reference: the Commonwealth can rely on its own powers anyway.

This Act contains no penalty provisions. All penalties for breaches of the substantive credit law are found in the Commonwealth Act (e.g., civil penalties of up to $500,000 for individuals or $1.8 million for companies for serious responsible lending breaches, plus criminal offences for unlicensed lending). Enforcement is carried out by ASIC, which has investigation, banning, and infringement notice powers under the Commonwealth Act.

The Act does affect enforcement indirectly. By ensuring the Commonwealth Act applies in WA, it means ASIC has full jurisdiction over credit providers in the State. The transitional provisions (notes) allow the WA CEO (the former regulator) to share information with ASIC and to arrange for ASIC to conduct pending proceedings under the old Code. This reduces the risk of enforcement gaps during the transition.

Separately, the Act preserves the possibility of the State taking enforcement action if the adoption or reference were terminated. In that event, the State could re-enact its own credit laws and penalties. But while the scheme is in force, the State cannot enforce its own credit penalties because the old WA Act was repealed (by the companion Act, not this Act directly). The Act therefore shifts enforcement costs and capacity from the State to the Commonwealth.

The Act operates as a constitutional gateway. It interacts with the National Consumer Credit Protection Act 2009 (Cth) and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) by adopting them and referring matters for their amendment. Without this Act, the Commonwealth Act would still apply in WA under the Commonwealth’s own heads of power (mostly the corporations power and the trade and commerce power), but it would not cover all credit providers - for example, a non-corporate lender operating solely within WA might escape regulation. This Act fills that gap.

The Act also interacts with the Consumer Credit (Western Australia) Act 1996 (repealed). The transitional provisions specify that pending proceedings under the old Code continue under that old Act, but otherwise the old Act is superseded. The effect is a clean break, except for litigation and tribunal matters already in the pipeline.

The Act excludes certain matters from the reference (s 7). This means Commonwealth laws cannot use the reference to impose stamp duties on credit transactions (State tax), alter the Torrens land title system, change priority rules for mortgages, or extinguish State-granted rights (such as professional licences). However, the Commonwealth may still regulate those matters under its own powers (e.g., the tax power for stamp duties does not exist at federal level, but the Commonwealth could theoretically impose a credit tax as a Commonwealth tax). The exclusions are a limit only on what can be done via the referral; they do not restrict the Commonwealth’s own independent powers.

The Act also interacts with the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) where credit is linked to goods or services. The National Credit Code deals with credit-specific issues; the Australian Consumer Law deals with misleading conduct, unfair contract terms, and consumer guarantees. Both can apply concurrently.

State laws that are not about credit - such as property law, contract law generally, and criminal law - remain unaffected. The reference does not extend to them. However, if a Commonwealth credit amendment were to conflict with a State property law, the Commonwealth law would prevail to the extent of the inconsistency (Constitution s 109). The exclusions in s 7(1)(b)-(d) are an attempt to avoid such inconsistencies by removing those matters from the reference, but they cannot override s 109.

The Act was enacted in 2010 (Act No. 13 of 2010). It received Royal Assent on 25 June 2010. Sections 1 and 2 commenced on that day; the remaining provisions commenced on 1 July 2010 by proclamation published in the Gazette on 30 June 2010. The compilation table in the notes shows no subsequent amendments. The Act has remained in its original form since 2010. The “relevant version” references the 2010 amendment Act as the only amendment included; later Commonwealth amendments to the National Credit legislation (such as the National Consumer Credit Protection Amendment Act 2012 or the Treasury Laws Amendment (Responsible Lending) Act 2021) are not part of the “relevant version” adopted under s 4. Instead, they take effect in WA either through the amendment reference (if they are express amendments to the National Credit legislation and relate to referred credit matter) or through the Commonwealth’s own powers.

The Act’s lack of textual amendment to date may reflect the fact that it is not a substantive law itself. Minor changes could be made by proclamation (e.g., terminating or varying the reference), but those do not amend the Act’s text. The Act’s stability is typical of referral acts: once the referral is made, the Commonwealth does the legislating.

The source text contains no references to litigation. I cannot invent cases. However, the Act’s validity under s 51(xxxvii) of the Constitution is subject to general principles from High Court decisions on referral Acts. The key precedent is Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vic) (2004) 220 CLR 388, which held that a referral Act must sufficiently define the matters referred; an open-ended reference to future Commonwealth amendments may be invalid unless adopted by the State in a manner similar to this Act’s adoption mechanism. The WA Act uses both adoption and reference, arguably satisfying that test. The limitation to “express amendments” and the carve-outs in s 7 are attempts to ensure the reference is not excessively wide.

The transitional provisions have likely been the subject of some litigation about whether proceedings under the old WA Code should be heard under the old Act or the new regime. The notes provide that pending proceedings continue under the old Act, but disputes about what constitutes “pending” or whether a specific proceeding is covered by item 4 of Schedule 1 to the Commonwealth Act could arise. No cases are cited in the text.

Future litigation could challenge whether a particular Commonwealth amendment is an “express amendment” within the meaning of s 3 or whether it relates to a “referred credit matter” rather than something else. The High Court may also determine whether the Act’s limitation of the reference to express amendments is effective to prevent the Commonwealth from using the reference to make regulations that affect credit without amending the text of the Acts. The exclusion of “express amendment” is defined to exclude implied amendments, but regulations made under the Act could be argued to affect operation (s 9(c) contemplates this). A challenge could arise if a Commonwealth regulation goes beyond what the State contemplated.

Several aspects of this Act can catch legal practitioners and regulated entities off guard.

The reference is narrower than it appears. Section 6(1) only refers matters for the purpose of making “express amendments”. That means the Commonwealth cannot use this reference to enact entirely new standalone Acts about credit, or to make regulations that change the effect of the National Credit legislation without directly altering its text. If the Commonwealth wants to impose a new licensing condition through a regulation that does not textually amend the Act, it would need to rely on its own powers (if available) or seek a new reference. This limits the Commonwealth’s ability to innovate through delegated legislation. Many assume the reference covers all Commonwealth credit laws; it does not.

The adoption is frozen at the 2010 version plus the 2010 amendment Act. Section 4(1) adopts only the “relevant version”. Later Commonwealth amendments take effect in WA only if they are validly made under the reference (for express amendments) or under the Commonwealth’s own powers. This creates a potential “patchwork” effect if the Commonwealth relies solely on the reference for some amendments and on own powers for others. If the Commonwealth attempts an express amendment that exceeds the reference (e.g., a non-credit matter), a WA court might find that amendment does not apply in WA. The Act’s s 9(b) tries to protect against this by saying the Commonwealth can also rely on its own powers, but the source of power matters for invalid amendments. Unsuspecting lenders who comply with every Commonwealth amendment assume it applies everywhere; it may not in WA if the amendment is ultra vires the reference and no other power exists.

The Governor’s termination power is unilateral and could create sudden regulatory change. A proclamation terminating the adoption or reference can be published with a future fixed day. Two weeks’ notice could see the entire national credit regime fall away in WA, leaving a regulatory vacuum unless the State has re-enacted its own code. The Act provides no grace period beyond the fixed day. Businesses operating across state borders would face a WA-specific regime with little warning. The revocation power allows a reversal before the fixed day, but after that day the termination is irreversible (except by a new Act). This is a high‑severity gotcha for compliance teams that ignore state‑level political risk.

The exclusion of State statutory rights is narrower than it sounds. Section 7(1)(d) excludes from the reference laws that exclude or limit the operation of a State law about “the creation, holding, transfer, assignment, disposal or forfeiture of a State statutory right”. But “State statutory right” excludes rights relating to credit or consumer leases (s 7(2)). So a mining licence or a taxi licence is protected; a credit licence is not. This means the Commonwealth could use the reference to override a State credit licence or other credit-related right. That surprised some WA stakeholders who thought all State-granted rights were shielded.

The transitional provisions only protect pending proceedings, not contracts entered into before commencement. Existing credit contracts entered into under the old WA Code are not grandfathered; they become subject to the National Credit Code from 1 July 2010. Although the Commonwealth Act contained its own transitional provisions (including a general regulation-making power), this Act does not spell out a detailed grandfathering for pre-2010 contracts. The practitioner must look to the Commonwealth transitional Act and any regulations. A failure to do so could result in compliance breaches for contracts that predate the regime.

“Commonwealth Credit instrument” is defined broadly and includes non-legislative instruments. Section 3 defines it as any instrument made or issued under the National Credit legislation, “whether or not of a legislative character”. That exposes regulated entities to binding changes via ASIC class orders, regulatory guides, or even directions that are not formally legislative. Section 9(c) confirms such instruments can affect the operation of the legislation. This is a soft-law trap: a non-legislative instrument that changes ASIC’s expectations may effectively become mandatory, and a credit provider cannot easily challenge it as invalid.

Compliance obligations under this Act are largely derivative of the Commonwealth laws it adopts and enables. Nevertheless, regulated entities and state officials should take specific steps.

For credit providers and lessors: Ensure your compliance framework is based on the current version of the National Consumer Credit Protection Act 2009 (Cth) and the National Credit Code as amended by the Commonwealth from time to time. Do not assume that all Commonwealth amendments automatically apply in WA; verify that the source of power for any amendment covers the WA referral. In practice, most amendments since 2010 have been based on the corporations power or other heads, so they do apply. But if an amendment appears to rely solely on the referral (especially one dealing with non-corporate lenders), check the explanatory memorandum for the constitutional basis. Maintain evidence of how you verify applicability. Also monitor WA’s Gazette for any termination proclamation. A sudden termination would require immediate contingency planning - perhaps including lobbying the State to re‑enact a compatible code.

For ASIC and regulators: Treat the WA regime as identical to the Commonwealth regime, but be aware of the s 7 exclusions. Do not attempt to regulate State taxes or land title matters using the reference. Also ensure that any enforcement action involving pending proceedings under the old WA Code is conducted in accordance with the transitional arrangements: ASIC can take over proceedings only if an arrangement is made with the WA CEO (note s 6). Failure to do so could see enforcement actions struck out.

For state officials: Maintain a protocol for monitoring whether the Commonwealth is making amendments that exceed the reference. If the Commonwealth uses the reference to impose a state tax (unlikely but theoretically possible), the WA government could object and potentially challenge the amendment in the High Court. The Governor’s power to terminate is the ultimate sanction, but it is politically costly. Officials should also ensure any proclamation of termination is drafted clearly about which amendments are excluded from the savings provisions (s 10(3)). The savings provisions are complex: terminating the amendment reference does not undo existing amendments, but it does stop new ones. If the goal is a clean break, the adoption itself must also be terminated.

For legal practitioners: When advising on a dispute involving credit laws in WA, check whether the matter arises from a period when the old WA Code applied (pre-1 July 2010) or the national regime. Pending proceedings on 1 July 2010 remain under the old Code. Also, if a client is challenging a Commonwealth regulation, consider whether it is an “express amendment” or not. If not, the Commonwealth may need an alternative power base. The carve‑outs in s 7 may provide a defence in cases where the Commonwealth attempts to override State property priorities or State statutory rights that are not credit-related.

For all entities: Keep a copy of the Act and the accompanying transitional provisions. Understand that this Act is the gateway; without it, the Commonwealth’s reach into WA credit would be patchier. Compliance is not optional just because the Act is short.