NATIONAL CONSUMER CREDIT PROTECTION AMENDMENT (HOME LOANS AND CREDIT CARDS) BILL 2011

Order of the day read for the adjourned debate on the motion of the Minister for Innovation, Industry, Science and Research (Senator Carr)—That this bill be now read a second time.

Debate resumed.

Question put and passed.

Bill read a second time.

The Senate resolved itself into committee for the consideration of the bill.

In the committee

Bill taken as a whole by leave.

Senator Xenophon moved the following amendment:

 Schedule 1, page 25 (after line 20), at the end of the Schedule, add:

Part 3—Amendments relating to termination fees and credit fees and charges

Banking Act 1959

 1 At the end subsection 9(4)

  Add "or the requirements of section 9AF".

 2 After section 9

  Insert:

9AF Variation of conditions of certain authorities

  (1) APRA must, within 30 days of the commencement of this section, vary the conditions of relevant existing section 9 authorities to give effect to this section and any new section 9 authority granted after that commencement to which this section applies must include conditions that give effect to this section.

  (2) The section 9 authority for a bank which has a market share of more than 10% must prohibit the bank from imposing an early termination fee in respect of any loan agreement or mortgage contract entered into by the bank after the commencement of this section.

  (3) If a bank which has a market share of more than 10% has an interest of 51% or more in a subsidiary which is an ADI, the section 9 authority for that ADI must prohibit the ADI from imposing an early termination fee in respect of any loan agreement or mortgage contract entered into by the ADI after the commencement of this section.

  (4) In this section:

   bank means an Australian ADI that is permitted under section 66 of the Banking Act 1959 to assume or use:

 (a) the word bank, banker or banking; or

 (b) any other word (whether or not in English) that is of like import to a word referred to in paragraph (a).

   early termination fee means any additional charge imposed on a borrower or mortgagor in any situation in which the borrower or mortgagor chooses to pay out the loan agreement or mortgage contract, as the case may be, ahead of the time specified in the relevant loan or mortgage contract.

market share means market share determined by APRA on the basis of proportion of total deposits.

Debate ensued.

Question—That the amendment be agreed to—put and negatived.

Senator Xenophon moved the following amendment:

 Schedule 1, page 25 (after line 20), at the end of proposed Part 3, add:

National Consumer Credit Protection Act 2009

 3 Before section 31 of the National Credit Code (in Division 4 of Part 2)

  Insert:

30C Credit fees or charges relating to credit contracts

  (1) A credit fee or charge payable by a debtor to a credit provider must be reasonable.

  (2) ASIC may, if satisfied on the application of a debtor or guarantor that a credit fee or charge is not reasonable, apply to the court for an order annulling or reducing the credit fee or charge and for any other ancillary or consequential orders.

  (3) In determining whether a credit fee or charge is not reasonable, ASIC must have regard to whether the amount of the credit fee or charge materially exceeds:

 (a) the credit provider's reasonable costs of undertaking the activity or service to which the credit fee or charge relates; or

 (b) the credit provider's average reasonable costs of undertaking the activity or service to which the credit fee or charge relates in respect of that class of contract.

  (4) In considering an application by ASIC under subsection (2), the court must have regard to whether the amount of the credit fee or charge the subject of the application materially exceeds:

 (a) the credit provider's reasonable costs of undertaking the activity or service to which the credit fee or charge relates; or

 (b) the credit provider's average reasonable costs of undertaking the activity or service to which the credit fee or charge relates in respect of that class of contract.

Debate ensued.

Question—That the amendment be agreed to—put.

The committee divided—

AYES, 2

Senators—

Madigan

Xenophon (Teller)

NOES, 43

Senators—

Abetz

Adams

Back

Bilyk

Birmingham

Bishop

Boyce

Brown, Bob

Brown, C (Teller)

Cameron

Cash

Colbeck

Crossin

Di Natale

Edwards

Fawcett

Feeney

Furner

Gallacher

Hanson-Young

Johnston

Ludlam

Lundy

Marshall

Mason

McEwen

Milne

Moore

Parry

Payne

Polley

Pratt

Rhiannon

Ronaldson

Sherry

Siewert

Singh

Stephens

Sterle

Thistlethwaite

Urquhart

Waters

Wright

Question negatived.

Bill agreed to.

Bill to be reported without amendment.

The Deputy President (Senator Parry) resumed the chair and the Chair of Committees reported accordingly.

On the motion of the Minister for Small Business (Senator Sherry) the report from the committee was adopted and the bill read a third time.