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Wednesday, 22 June 2011
Page: 6877


Mr SHORTEN (MaribyrnongAssistant Treasurer and Minister for Financial Services and Superannuation) (13:16): I present a supplementary explanatory memorandum to the bill and seek leave to move amendments (2) to (10) together.

Leave granted.

Mr SHORTEN: I move government amendments (2) to (10):

(2) Schedule 1, item 5, page 6 (lines 11 to 19), omit subsections 133AC(4) and (5).

(3) Schedule 1, item 7, page 10 (lines 7 to 10), omit the item.

(4) Schedule 1, item 11, page 10 (lines 21 to 23), omit the item.

(5) Schedule 1, item 13, page 11 (lines 1 to 4), omit the item.

(6) Schedule 1, item 16, page 11 (lines 14 to 17), omit the item.

(7) Schedule 1, item 19, page 12 (lines 16 to 18), omit all the words from and including "Division 5" to and including "fees etc.", substitute "Division 5 provides for consumers to be notified if a credit card is used in excess of its credit limit, and restricts the charging of fees etc. for use of a credit card in excess of its credit limit.".

(8) Schedule 1, item 19, page 15 (line 32) to page 16 (line 7), omit subsections 133BD(3) and (4).

(9) Schedule 1, item 19, page 19 (line 20) to page 24 (line 30), omit Division 5, substitute:

Division 5—Use of credit card in excess of credit limit

133BH Credit provider to notify consumer of use of credit card in excess of credit limit

Regulations may require licensee to notify consumer of use of credit card in excess of credit limit

(1) The regulations may require a licensee who is the credit provider under a credit card contract to notify the consumer who is the debtor under the contract if the licensee becomes aware that the debtor has used a credit card that is linked to the contract to obtain cash, goods or services in excess of the credit limit for the contract.

(2) Without limiting subsection (1), regulations made for the purpose of that subsection may deal with:

(a) how and when the licensee must notify the consumer; and

(b) the matters that must be included in the notification.

Requirement to comply with the regulations

(3) A licensee must comply with regulations made for the purpose of subsection (1).

Civil penalty: 2,000 penalty units.

Offence

(4) A person commits an offence if:

(a) the person is subject to a requirement under subsection (3); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 50 penalty units.

133BI Credit provider not to impose fees etc. because credit card used in excess of credit limit

(1) If a credit card is used to obtain cash, goods or services in excess of the credit limit for the credit card contract, the licensee who is the credit provider under the contract must not, because the credit limit was exceeded, impose any liability to pay fees or charges, or a higher rate of interest, on the consumer who is the debtor under the contract unless:

(a) the licensee has, in accordance with this section, obtained express consent from the consumer covering the imposition of the fees or charges, or the higher rate of interest; and

(b) the consent has not been withdrawn; and

(c) any other requirements prescribed by the regulations are complied with.

Note 1: The consent must be express, and cannot be implied from the actions of the consumer or from other circumstances.

Note 2: The licensee must keep records of consents and withdrawals: see section 133BJ.

(2) The consumer may consent to the licensee imposing a liability to pay fees or charges, or a higher rate of interest, if the credit card is used to obtain cash, goods or services in excess of the credit limit.

(3) Before obtaining the consumer's consent, the licensee must, in accordance with the regulations, inform the consumer of any matters prescribed by the regulations.

(4) The consent may be obtained before or after the credit card contract is entered into, but it does not cover any fees, charges or interest imposed before the consent is obtained.

(5) The consumer may withdraw the consent at any time.

(6) The regulations may prescribe requirements to be complied with in relation to giving consent under subsection (2), or withdrawing consent under subsection (5).

(7) For the purpose of subsection 23(1) of the National Credit Code (and the other provisions of the Code that refer to, or apply in relation to, that subsection):

(a) a liability to pay a fee or charge that is imposed contrary to subsection (1) of this section is taken to be a credit fee or charge that is prohibited by the Code; and

(b) a liability to pay interest that is imposed contrary to subsection (1) of this section is taken to be an interest charge under the credit card contract exceeding the amount that may be charged consistently with the Code.

Note: For the civil and criminal consequences of contravening subsection 23(1) of the National Credit Code, see subsections 23(2) to (4), section 24, and Part 6, of the Code.

133BJ Records of consents and withdrawals to be kept

Requirement

(1) A licensee must, in accordance with the requirements prescribed by the regulations, keep a record of:

(a) consents the licensee obtains under section 133BI; and

(b) withdrawals of such consents.

Civil penalty: 2,000 penalty units.

Offence

(2) 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.

(10) Schedule 1, item 21, page 27 (lines 25 to 27), omit note 2, substitute:

Note 2: This subsection also applies to liabilities imposed contrary to section 133BI of the National Credit Act: see subsection (7) of that section.

On behalf of the government, I move a number of minor but nonetheless important parliamentary amendments to the bill. These amendments will help minimise the cost of implementation for industry and will make things simpler for consumers while ensuring strong protections for families. Firstly, we have listened to the stakeholders and agreed with the House of Representatives Standing Committee on Economics recommendation that the commencement date for the obligation to provide a home loan key facts sheet be moved to 1 January next year. This will give lenders almost a full year and a half to implement this important reform from the time when this reform was first announced. We have also amended two offence penalty provisions: first, where a licensee does not have a website that allows the consumer to generate a home loan key facts sheet and, second, where a licensee enters into a contract without having supplied a credit card key facts sheet to the borrower. Persons who breach these provisions will be liable for civil and criminal penalties, and the strict liability of the provisions are considered no longer necessary. This reflects the fact that sometimes lenders may commit a foot fault with some small technical breach despite having made every effort in good faith to comply. It is important that in these circumstances there is some discretion available to provide them with relief.

Next, it is proposed to amend the bill to allow consents given by consumers before 1 July 2012, when the law commences, to receive unsolicited credit limit invitations, to be relied upon. This change makes these reforms more workable for industry whilst still allowing invitations to be sent only to consumers who provide informed consent. Lastly, we have simplified the operation of the overlimit buffer reform. This amendment will make things simpler and easier to understand for consumers while preserving the strong level of protection that this critical reform provides. Lenders will also be required to notify consumers when they go over their credit limits and will not be able to charge a fee unless the consumer has given their express consent to being charged a fee. These are minor amendments but important changes to minimise the costs for industry and ensure strong protection for consumers.