The new National Consumer Credit Protection Legislation 2009 took effect on 1 April 2010. Under the new laws, if you currently engage in credit activities under state or territory legislation, and you want to continue to engage in credit activities from 1 July 2010, you may need to be registered with ASIC. Generally, a person or business who is involved in credit activities is engaged in the following:

• Credit contracts;
• Consumer leases;
• Mortgages; and
• Guarantees.

This also includes the hiring of goods for personal, domestic or household purpose such as a television or refrigerator for example.

The primary purpose of the new legislation is to:

• help protect consumers
• remove inconsistencies within and between businesses and
• better regulate and standardise Australia’s consumer credit laws on a National level, rather than on a State level.

As a business, in order to register, you must complete an application form and lodge it with ASIC. Registration closes on 30 June 2010. If you are not registered with ASIC by 1 July 2010, you must stop engaging in credit activities until you either become registered or have an Australian Credit Licence.

Registered entities will also be required to apply to ASIC for a Credit License between 1 July 2010 and 31 December 2010. The main types of businesses who will require a licence include providers of credit such as banks, and providers of credit services, for example credit and mortgage brokers. Once registered, in order to conduct credit activities you must adhere to the conduct obligations.

Some of the benefits to consumers include:

• Preventing consumers from being offered loans that are clearly unsuitable for them or that they cannot afford to repay.
• Enhancing the understanding of credit products by greater disclosure of information, including fees, charges and commissions.
• Protection when borrowing for residential investment property.
• Comprehensive regulatory coverage of the credit industry for previously unregulated sectors such as mortgage brokers.

Consumer credit laws may also benefit businesses in some of the following ways:

• Reduced duplication, red tape and compliance costs as eight sets of current regulation are replaced with one national scheme.
• A level playing field across the credit industry by requiring all industry participants to meet required conduct obligations and standards. This also promotes increased consumer and market confidence.
• The establishment of two clear groups of credit participants — credit providers and credit service providers.
• Enhancement of industry standards through one national market subject to obligations and requirements by one national law enforced by a national regulator — ASIC.
• Raised industry standards by establishing minimum requirements such as responsible lending conduct, and disclosure considerations in providing credit services.
• Reduced costs to business of responding to enforcement action through the use of a broader set of consumer remedies and enhanced ASIC enforcement powers.

Understandably this new legislation can be a little confusing. If you are unsure if you need to register or if you have any queries about the new National Consumer Credit Protection Legislation contact our experienced legal team. Click here to submit an online enquiry or call on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to make an appointment.