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National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011

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7110

2010-2011

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

 

National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011

 

(1)     Clause 2, page 2 (after table item 3), insert:

 

3A.  Schedule 1, Part 3

The day after this Act receives the Royal Assent.

 

 

[consequential—commencement of Part 3 about termination fees and credit fees and charges]

(2)     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.

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.

[termination fees and credit fees and charges]