The National Consumer Credit Protection Act 2009: What does it Mean for Us?

To give you some idea about the total concept involved in the amended National Consumer Credit Protection Act 2009 there are 431 pages within the amended?legislation. A little bit of light reading for those interested in what it means for us. It was amended on 23rd July 2020. It is important to understand it, especially when we live in the age of the consumer in the twenty first century. My advice would be ignore this at your peril. The Oxford Dictionary defines credit as:

“The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.”

Based on ‘trust’, who would have thought that economics and the financial sector would be dependent upon such an endearing concept. For without credit the capitalistic system would grind to an almighty halt. Things wouldn’t get built and the zillions of transactions would not happen. The price of that trust is usually interest, charged to the borrower by the lender.?

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.” Will Rogers

“[Credit is a system whereby] a person who can’t pay, gets another person who can’t pay, to guarantee that he can pay.” Charles Dickens

Economists will tell you that the modern world would not have happened without credit and the development of our large urban cities are dependent upon its existence to function. Of course, we live in a world where cash is a rapidly disappearing commodity and credit rules our lives. Therefore, understanding or at least comprehending aspects of the National Consumer Credit Protection Act 2009 (NCA) is a pretty good idea if you want to get along in life.?

What Is In The NCA 2009??

In the most part the National Consumer Credit Protection Act 2009 (NCA) defines all the roles, terms, and regimes at play within the financial sector, as it applies to consumer credit. The NCA replaces the state government based consumer credit codes and the Uniform Consumer Credit Code (UCCC) with a national credit code. Its main function is to provide consumer protection law for credit in Australia. It does this by ensuring that lenders are licenced and that there are external dispute resolution schemes in place. Responsible lending is the buzzword terminology employed in the laws designed to remove unsuitable lenders and practices from the industry. These include unsuitable credit limit increases and products, which the consumer is unable to comply with re-their financial obligations.

The National Credit Code does not apply to?low-cost loans, short-term credit, which is less than 62 days, pawnbroker loans, staff loans, margin loans, bill facilities, and instalment-paid insurance premiums. (Crosswell, 2022)

The NCA does not apply to Buy Now Pay Later loans. (de Kretser, 2022)

What Does the National Consumer Credit Protection Act 2009 Apply To??

The NCA applies to home loans, car loans, personal loans, credit cards, consumer leases, and most banking products. The NCA under Section 17 of the National Credit Code ensures that contracts for credit must stipulate:

·????The loan amount.

·????The name of the credit provider.

·????Interest rate & how it is calculated.

·????The frequency, amount, & total number of repayments.

·????Account statement frequency.

·????The details of any mortgages or guarantees.

·????Commissions payable.

·????Default actions defined.

The key differences between the NCA and the previous UCCC include amended hardship provisions, it removed requirements for comparison rates schedules (except in ads for credit), introduced new default notice requirements, and included loans for residential investment properties. (ASIC, 2021)

Comparison Rates

The National Credit Code requires credit providers to include a comparison rate, under Section 157, when advertising their fixed term credit for personal/household customers. This must show the interest rate and fees and charges. The intention of this is to reveal; the true cost of the credit, but the comparison rate does not include government fees and charges and early repayment fee charges. ASIC can prosecute lenders who fail to comply with the NCA, which could result in credit providers paying a fine or being liable to pay damages to a consumer.

“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry.”?Thomas Jefferson

ASIC Commences Civil Proceedings Against Sunshine Loans Pty Ltd

On the 7th June 2022 ASIC sued Sunshine Loans for collecting fees totalling $320,000 that ASIC alleges it was prohibited from charging. This matter related to Small Amount Credit Contracts and concerned charges levied to customers when they sought to reschedule repayments. These fees were charged prior to November 2020 and potentially affected some 670, 000 customers. (22-132MR ASIC)

ASIC Sues ANZ Bank for Overstating Account Balances & Charging Fees

Civil proceedings against ANZ have commenced, according to an ASIC media release dated 30th May 2022. ASIC alleges that ANZ have, between May 2016 and November 2018, charged around 165, 750 customers cash advance fees and interest for withdrawing or transferring money from their credit card accounts on the basis of incorrect account balances. This problem has not been fixed at the publication date of the relevant media release by ASIC.?

Westpac Penalised $113 Million Following ASIC Legal Actions

$113 million may sound like a lot of money, but when the Big Four Banks earned $14.4 billion in 6 months in 2022 it puts things into perspective. (EY, 2022) The fines were for six separate proceedings against Westpac by ASIC. 70, 000 customers were impacted by these banking indiscretions and included charging advice fees to over 11, 800 dead customers. (22-097MR ASIC)?

The Financial Services Royal Commission raised many of the issues and shone a harsh light on the ineffectiveness of the banking regulators to previously take action against the banks and other financial services providers. Justice Beach noted that compliance failures were common and that the misconduct was serious.?

Banks Are Still Charging Dead People Fees Long After The Royal Commission

There was a lot of shock and outrage expressed by the media and general public at the findings unearthed by the Financial Services Royal Commission in 2017/18. This was well justified by the volume and nature of the transgressions committed by banks and credit providers. I wonder; however, how long vigilant scrutiny will last and how soon the financial sector will return to its nefarious ways. The media cycle only lasts a certain time and the short-term memories of us all will revert to our own small patch of awareness. Daniel Ziffer, ABC business journalist, reports that banks are still charging deceased customers fees some two years on from the Royal Commission into the financial sector. (Ziffer, 2020) The Commonwealth Bank and Westpac are the two main offenders on this charge accounting for 72% of the breaches. A financial impact of more than $100 million involving 20, 863 breaches of the code has been identified.

It is important to remember that the Abbott/Turnbull coalition government resisted having a royal commission into the financial sector for many years prior to its advent. This was despite masses of public interest and potential evidence, which proved to be on the money, as they say in banking circles. Could this have had anything to do with friends in high places and the unexamined sway of the big donors on our political system? Australia remains a ripe target for unseen hands on the levers of power and an unwillingness to join the obvious dots persists in political circles. Outrage only lasts a certain time and media hacks always move on to the next juicy story.?

“Remember when nurses, carers, teachers and students crashed the stock market, wiped out banks, took billions in bonuses and paid no tax??

No, me neither.”?Fuad Alakbarov

ASIC Brings Criminal Charges Against the Commonwealth Bank

Criminal charges have been filed against the Commonwealth Bank of Australia by ASIC under the ASIC Act, alleging false and misleading representations. (21-251MR ASIC, 2021) The Commonwealth Bank (CBA) pleaded guilty to 30 criminal charges of making false representations to 165 customers while selling consumer credit insurance. No individuals were charged and only the corporate entity was charged and found guilty. (Ferguson, 2019)

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.” Mark Twain

The National Consumer Credit Protection Act 2009 is catching some credit providers and charging them with non-compliance. These white collar crimes are not sending anyone to gaol unlike blue collar crimes. This is despite the size of these crimes being far larger than any individually committed blue collar crimes. Yes, we have heard this song before. If you want to get away with it, then, study hard and learn your NCA legislation. It pays to be well informed when it comes to ripping off the system. I may sound like a broken record on this, but remember that knowledge is power.

The Smart Money on Credit Repair?

If you have been bitten by a bad credit rating but don’t know what to do about it read on. Credit repair is possible if you know what’s what or you have someone in your corner who does. An expert in credit reporting law in Australia can assist you in your endeavours to repair your credit score. Unlike those dubious credit repair companies, with loud websites lining up to take your money, a lawyer can effect real change where possible. The restoration of credit worthiness is achievable in certain circumstances. Money won’t buy you love in these kinds of situations. The deletion of negative listings on your consumer credit file can turn things around in terms of your rating. Understanding how the credit rating system works and the legality of time-frames involved in things dropping off will re-frame your ability to restore financial credibility. Only listings which are incorrect and or misleading can be removed ahead of time. Your No Win No Fee credit reporting law specialist can assist you in preventing negative information appearing when justified. Understanding fully the Privacy Act 1988 and the National Consumer Credit Protection Act 2009 can arm your intentions with the right stuff. Remember that mistakes are made by human beings all the time.?

“To err is human, to forgive, divine.”?Alexander Pope

Let’s forget about forgiving in this instance and focus on finding someone to identify the errors in your credit file. You can request a free copy of your consumer credit report every 3 months from each of the 3 credit bureaus:

Credit Reporting Agencies

Illion Ph. 1300 734 806

Experian Ph. 1300 783 684

Equifax Ph. 138 332

These credit reporting agencies may each have noticeably differing data about your activities on their files, so it is recommended you request copies of your consumer credit report from each of them for optimum results. If you have some difficulty in understanding the information within your credit report expert help is available. The devil is in the detail, of course, as it always is when it comes to money, credit, and contracts.

The National Consumer Credit Protection Act 2009: What does it mean for us?

It offers greater protection for those willing to take the time to carefully examine the fine detail inherent in any offer of credit. The law can protect us from irresponsible lenders if we pay attention enough to what is on offer when it comes to credit, loans, and banking products. Trust is, apparently, the bedrock upon which the credit system works, although we are charged interest for that trust in financial terms. The complexity of the NCA means that it may also provide protection post transaction and that a good credit law specialist may find some means of redress on our behalf in certain instances. The Royal Commission into Financial Services shockingly revealed the extent of criminal and civil banking transgressions against millions of Australians. This industry was and is rife with rip offs and rorts. ASIC was until recently a toothless tiger in the face of rampant illegal practices performed by legions of bankers. More successful prosecutions have come about since 2018 but no individual banker has been criminally charged only corporate entities. White collar crime continues to pay it seems via the evidence available here in Australia. In deference to the sector as a whole there are many within the financial services industry doing the right thing but a culture of profits above all else has flourished for some time. As consumers we need to be well informed and vigilant when dealing with consumer credit products and those selling them to us.

References

ASIC, Media Releases, asic.gov.au Viewed 25th July 2022.

Adele Ferguson, CBA criminal charges a good first step – but ASIC needs to do more, SMH, https://www.smh.com.au/business/banking-and-finance/cba-criminal-charges-a-good-first-step-but-asic-needs-to-do-more-20191004-p52xra.html Viewed 25th July 2022.

Ayesha de Kretser, Regulate buy now, pay later or consumers will suffer…, Choice Magazine 2022, Viewed 25th July 2022.

Sally Crosswell, National Consumer Credit Protection Act 2009, 2022, https://www.armstronglegal.com.au/commercial-law/national/legislation/national-consumer-credit-protection-act-2009 Viewed 24th July 2022.

EY Oceania, Big banks deliver solid earnings, but uncertainty remains, ey.com/en_au/news Viewed 26th July 2022.?

Federal Register of Legislation, NCA 2009, 2020, https://www.legislation.gov.au/Details/C2020C00215 Viewed 24th July 2022.

Daniel Ziffer, Banks still charging dead people months after royal commission…., ABC, 31 August 2020, Viewed 26th July 2022.