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Consumer Credit Protection Amendment (Fees) Bill 2011

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2010-2011

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

SENATE

 

 

 

 

 

 

CONSUMER CREDIT PROTECTION AMENDMENT (FEES) BILL 2011

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of Senator N Xenophon)

 

 



 

 

CONSUMER CREDIT PROTECTION AMENDMENT (FEES) BILL 2011

 

 

1.  Short Title

 

This clause is a formal provision and specifies the short title of Bill, once enacted, as the Consumer Credit Protection Amendment (Fees) Act 2011 .

 

 

2.  Commencement

 

This clause provides for the commencement of Sections 1 to 3 of the Act on the day the Act receives Royal Assent and the commencement of Schedules 1 and 2 the day after this Act receives Royal Assent.

 

 

3.  Schedule(s)

 

This clause states that each Act specified in a Schedule to this Act is amended or repealed according to the provisions of this Act, according to its terms.

 

 

4.  Schedule 1 - Amendment of the National Consumer Credit Protection Amendment (Fees) Bill 2011

 

This Schedule inserts section 30B into Division 4 of Part 2 of the National Credit Code, relating to credit fees or charges relating to credit contracts.

 

Under this section, a credit fee or charge must be reasonable, which means that it must not materially exceed the credit provider's reasonable costs of undertaking the activity or service to which the fee relates, or the credit provider's average reasonable costs of undertaking the activity or service to which the fee relates in respect of that class of contract.

 

Subsection (2) provides that ASIC may apply to the court for an order to annul or reduce the credit fee or charge, and for other ancillary orders, if it is satisfied that a credit fee or charge is not reasonable.

 

In considering an application by ASIC, the court must have regard to the same criteria of what is considered 'reasonable', ie. that it does not materially exceed the credit provider's reasonable costs of undertaking the activity or service to which the fee relates or the credit provider's average reasonable costs of undertaking the activity or service to which the fee relates in respect of that class of contract.

 

 

5.  Schedule 2 - Amendment of the Banking Act 1959

 

Schedule 2 inserts section 9AF after section 9.

 

Item 1 inserts a cross-reference to the new section at the end of subsection 9(4) relating to APRA being able to impose, vary or revoke conditions of authorities.

 

Item 2 inserts the new section 9AF into the Banking Act 1959 . It requires APRA to place conditions on banks with a market share of more than 10 percent to be prohibited from imposing an early termination fee in respect of any loan agreement or mortgage contract.

 

Furthermore, under subsection (3), if a bank which has a market share of more than 10 percent has an interest of 51 percent or more in a subsidiary which is an authorised deposit-taking institution, that subsidiary must also be prohibited from imposing an early termination fee in respect of any loan agreement or mortgage contract.

 

Subsection (4) inserts definitions relevant to this section with respect to the terms bank , early termination fee , and market share .

 

Market share under this definition is to be determined by APRA on the basis of proportion of total deposits.