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Banking and Consumer Credit Protection Amendment (Mobility and Flexibility) Bill 2011

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2011

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

BANKING AND CONSUMER CREDIT PROTECTION AMENDMENT

(MOBILITY AND FLEXIBILITY) BILL 2011

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

Circulated by the authority of Adam Bandt

 

 

 

 

 

 

 

 

 

 

 

Banking and Consumer Credit Protection Amendment

(Mobility and Flexibility) Bill 2011

 

 

OUTLINE

 

The Banking and Consumer Credit Protection Amendment (Mobility and Flexibility) Bill 2011 (the Bill) amends the Banking Act 1959 by:

·          allowing consumers to switch bank accounts more easily , by requiring the new authorised deposit-taking institution (ADI), after being advised to do so by the account holder, to arrange for all direct debits and direct credits made in relation to the account holder's old ADI to be made instead in relation to the new ADI for 13 months, and to oblige the old ADI to provide the new ADI with all the information necessary to comply with this; and

·          providing consumers with more transparent information regarding their term deposits , by requiring their ADI to give written notice of the interest rate and the term that will apply if the money in the term deposit is automatically reinvested at the end of the current term, and any special term interest rates and other special offers available from the ADI at that time.

The Bill also amends the National Consumer Credit Protection Act 2009 by:

·          providing consumers with more transparent information about their rights , by requiring lenders to clearly and prominently inform borrowers when they take out a loan of the provisions of the Act which relate to unconscionable charges; and

·          requiring mortgage indemnity insurance contracts to be terminated when the mortgage it relates to is also terminated , and requiring the credit provider to pay the debtor or credit the debtor with an actuarially fair rebate of premium paid under the contract, and allowing the credit provider, in turn, to recover the amount of the rebate from the insurer.

 

 

 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

 

This is a formal provision specifying the short title.

 

Clause 2 - Commencement

 

The Bill's provisions are to commence 28 days after the Bill receives Royal Assent

 

Clause 3 - Schedules

 

This clause provides that the Banking Act 1959 and the National Consumer Credit Protection Act 2009 are amended as set out in Schedules 1 and 2.

 

 

Schedule 1 - Amendments to the Banking Act 1959

 

 

Item 1 gives effect to new sections 9AG and 9AH of the Act, as outlined in this Bill.

 

 

Item 2 inserts sections 9AG and 9AH into the Act.

 

 

Section 9AG - Variation of conditions of authorities—switching services

 

Subsection 9AG(1) empowers and requires the Australian Prudential Regulation Authority (APRA) to vary the conditions of existing section 9 authorities such that authorised deposit-taking institutions (ADIs) abide by the provisions of this section.

 

Subsection 9AG(2) requires ADIs to offer switching services to personal account holders.

 

Subsection 9AG(3) explains how such a switching service would operate. Personal account holders advising their new ADI that they wish to transfer one or more transaction accounts from their existing ADI(s) to their new ADI will empower the new ADI to arrange for all direct debits and direct credits made in relation to the old accounts to be made instead in relation to the new account.

 

Subsection 9AG(4) obliges the old ADI to cooperate with the new ADI, by requiring the old ADI to provide all the information necessary for the new ADI to comply with subsection 3, and to otherwise facilitate the transaction account(s) by all reasonable means.

 

Subsection 9AG(5) defines ‘direct credit’, ‘direct debit’ and ‘switching service’ for the purposes of this section.

 

 

Section 9AH - Variation of conditions of authorities—term deposits

 

Subsection 9AH(1) empowers and requires APRA to vary the conditions of existing section 9 authorities such that authorised deposit-taking institutions (ADIs) abide by the provisions of this section.

 

Subsection 9AH(2) requires any ADI offering term deposits to give written notice to the holder of a term deposit at least 15 working days before the end of the term the following information: the interest rate and the term that will apply if the if the funds are automatically reinvested; and any special term interest rates, special interest rates or additional bonus interest rates that are available from the ADI at that time. Such information is required to be set out clearly and prominently on the written notice.

 



 

Schedule 2 - Amendments to the National Consumer Credit Protection Act 2009

 

 

New provisions relating to unjust transaction and unconscionable interest and other charges

 

Item 1 inserts a new subsection 17(4A) into the National Credit Code relating to unjust transactions and unconscionable interest and other charges in credit contracts.

 

This new subsection requires the credit contract to contain information that expressly advises the debtor of any unjust transactions and unconscionable interest and other charges as defined in the National Credit Code, as well as the debtor’s rights under those provisions.

 

 

New provisions relating to mortgage indemnity insurance

 

Item 2 inserts a new subsection 17(15A) into the National Credit Code relating to information about recovery of insurance premiums.

 

This new subsection requires contracts of the type mentioned in sections 147A, 148 and 149 of the National Credit Code (i.e. mortgage indemnity insurance contracts) to expressly advise the debtor of the debtor’s rights under these sections.

 

Item 3 inserts a new section 147A into the National Credit Code relating to the termination of mortgage indemnity insurance contracts. It contains 5 subsections:

 

Subsection 147A(1) requires a mortgage indemnity insurance contract relating to a mortgage contract to be terminated when the mortgage contract is terminated.

 

Subsection 147A(2) requires the mortgage credit provider to pay the debtor or credit the debtor with a rebate of premium paid under the mortgage indemnity insurance contract, within 28 days of the mortgage indemnity contract being terminated.

 

Subsection 147A(3) allows the regulations to dictate the amount of rebate that must be paid under subsection 2, but requires the regulations to provide for an actuarially fair amount of rebate.

 

Subsection 147A(4) enables the mortgage credit provider, which has paid the debtor a rebate of premium paid under a mortgage indemnity insurance contract as per subsection 2, to, in turn, recover the amount of that rebate from the insurer.

 

Subsection 147A(5) gives effect to this section despite any provisions in any mortgage indemnity insurance contract.

 

Item 4 clarifies subsection 149(1) of the National Credit Code.

 

 

END.