[vc_row][vc_column][vc_column_text]At CreditReboot we have begun to encounter CP’s under the impression that they do not have to keep a credit contract for longer than 7 years. This is totally incorrect. Because of this, this module about Lending Obligations will focus on the regulation that we use to obtain Credit Disclosure. Keep note of any phrases or help segments of regulation that you might be able to use to fight back unruly Credit Providers!
A Section 286 of the Corporations Act and Section 95 of the NCCP Act requires that financial records be kept for a period of seven years after the transaction has been completed and clearly in most cases the transaction is ongoing because they are still holding the client to the contract and trying to collect the debt.
Section 185 of the National Credit Code also clearly says that a CP must retain a copy of the Credit Contract and PRODUCE it when requested AND it can be a criminal offence if they fail to do so. Not providing a copy of the credit contract significantly bolsters our negotiation position. We also make reference to this Section in our template DM_CD_INCOMPLETE_CP
Its important to note that this section survives the contract itself for 2 years i.e. if our client requests a copy of a credit contract that has been discharged up to two years earlier then the CP must provide. This gives weight to our assertion that they must retain a copy whilst the contract is still ‘alive’ (enforceable).[/vc_column_text][vc_btn title=”Responsible Lending Guide to Potential Breaches 19012021.PDF” color=”blue” link=”url:https%3A%2F%2Fdrive.google.com%2Ffile%2Fd%2F1hFPOF6lz5vkD2JLAes0SV7CqoDqAa4Na%2Fview%3Fusp%3Dsharing|||”][vc_column_text]It’s important to note that Regulation 28L sets out the ways for giving credit disclosure documents. These documents can be given to a consumer personally or, if the consumer consents, can be sent electronically or made available for retrieval in an electronic format. Consumers can withdraw their consent to electronic communication at any time: see regulation 28L(4).
Section 126 of the NCCP place a requirement on the CP to provide a Credit Guide (and section 127 if they are a debt collector as assignee);
126 Credit guide of credit providers
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it becomes apparent to the licensee that it is likely to enter a credit contract with a consumer who will be the debtor under the contract, give the consumer the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 5,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the AFCA scheme; and
(f) give information about the licensee’s obligations under sections 132 and 133; and
(g) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe information that need not be included in the credit guide, despite subsection (2).
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
NCCP Regulations
28L Manner of giving disclosure documents
(1) This regulation is made for the following provisions of the Act:
(a) subsection 113(4) (credit guide of credit assistance providers in relation to credit contracts);
(b) subsection 114(3) (quote by credit assistance providers in relation to credit contracts);
(c) subsection 121(4) (credit proposal disclosure document of credit assistance providers in relation to credit contracts);
(d) subsection 126(4) (credit guide of credit providers in relation to credit contracts);
(e) subsection 127(4) (credit guide of assignee credit providers in relation to credit contracts);
(f) subsection 136(4) (credit guide of credit assistance providers in relation to consumer leases);
(g) subsection 137(3) (quote by credit assistance providers in relation to consumer leases);
(h) subsection 144(4) (lease proposal disclosure document of credit assistance providers in relation to consumer leases);
(i) subsection 149(4) (credit guide of lessors in relation to consumer leases);
(j) subsection 150(4) (credit guide of assignee lessors in relation to consumer leases);
(k) subsection 158(4) (credit guide of credit representatives);
(l) subsection 160(5) (credit guide of debt collectors).
(m) section 18 of Schedule 1 (credit provider’s contract document).
(2) In this regulation:
licensee includes a person who is a credit representative of a licensee.
(3) A licensee may, with the consent of the consumer, give a disclosure document to the consumer by:
(a) making the document available for a reasonable period on the licensee’s information system for retrieval by electronic communication by the consumer; and
(b) promptly notifying the consumer by electronic communication that the document is available for retrieval on that information system and the nature of document; and
(c) providing the consumer with the ability to retrieve the document by electronic communication.
(4) A consumer may consent to the giving of documents by electronic communication only after being told that, if consent is given:
(a) paper documents may no longer be given; and
(b) electronic communications must be regularly checked for documents; and
(c) consent to the giving of documents by electronic communication may be withdrawn at any time.
(5) If a disclosure document is given by sending it to a nominated electronic address or in a manner described in this regulation:
(a) it must be in a format that allows it to be saved to an electronic file and to be printed; and
(b) at the time it was sent or was made available on the licensee’s information system, it would have been reasonable to expect that the intended recipient would be able to save it to an electronic file and print it.
(6) If a disclosure document is not given to a consumer personally, or to a person acting on the consumer’s behalf, the licensee must be reasonably satisfied that the consumer has received the disclosure document before engaging in further credit activities in relation to the consumer’s credit contract or consumer lease.
(7) For subregulation (6), a person is not acting on the consumer’s behalf if the person is engaging in credit activities.
(8) The licensee may be reasonably satisfied that a consumer has received a disclosure document (unless the consumer advises the licensee otherwise):
(a) if the disclosure document is a credit guide and was made available to the consumer for retrieval on the licensee’s information system—when the consumer tells the licensee that he or she has accessed the document on the information system; or
(b) in any other case—if the disclosure document was properly addressed to the consumer and sent to that address (including an electronic address or fax number).
(9) Two or more disclosure documents may be combined in a single document only if all other requirements of the Act and these Regulations are met.
So with respect to Credit Guides it 1) must be given personally in writing or 2) can be made available on the website or 3) sent via email to the consumer ONLY if the consumer has consented and the CP can show that such consent was given so they can satisfy (6)
We should be asking the CP for evidence to show where the consumer has consented to receiving the credit Guides in another manner other than in writing. If they can’t provide that evidence then it is a clear breach and is serious given that it could potentially be a criminal offence. [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”5/6″][vc_custom_heading text=”Legal Questions Quiz” google_fonts=”font_family:Cabin%3Aregular%2Citalic%2C500%2C500italic%2C600%2C600italic%2C700%2C700italic|font_style:400%20regular%3A400%3Anormal”][/vc_column][vc_column width=”1/6″][vc_btn title=”START” color=”success” link=”url:http%3A%2F%2Fcreditcheckapp.com.au%2Feforms%2Flegal-questions%2F71%2F|||”][/vc_column][/vc_row]