Understanding credit and finance

Credit usually involves someone borrowing money and agreeing to pay it back later with interest, fees or charges. Common forms of credit are home loans, credit cards, store cards and accounts, personal loans and pay-day loans. Other financial products or services that may be protected by Australian consumer credit laws include lease contracts for the supply of goods, mortgages, guarantees, terms contracts for the sale of land and pawn broking contracts. Buy-now-pay-later products are also a form of credit, but are not necessarily subject to protections in Australian consumer credit laws. The Federal Government is proposing to bring buy-now- pay-later products under the same legislation as other consumer credit products. However, legislation is unlikely to be introduced and enacted until 2024.

The key consumer credit legislation is the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’), the National Consumer Credit Protection Regulations 2010 (Cth) (‘NCCP Regulations’) and the National Credit Code (NCC).

The NCC is very similar to the Uniform Credit Code (‘Old Code’), which was the main consumer credit law before 1 July 2010. The Old Code commenced on 1 November 1996 and still has limited application to some contracts entered into before the NCC commenced (for discussion of transitional arrangements, see ‘What credit contracts are regulated by the NCC?’, below).

In addition, protections in the Australian Securities and Investments Commission Act 2001 (Cth) relating to misleading or deceptive conduct, unconscionable conduct and unfair contract terms, may also assist consumers of credit (see Chapter 7.2: Consumer protection laws).

Guidance on credit law can be found in the various regulatory guides published by the Australian Securities and Investments Commission (ASIC) (see www.asic.gov.au/rg).

Credit providers may also have obligations under one or more codes of conduct. These include the:

• Banking Code of Practice (‘Banking Code’) (see ‘Banking Code of Practice’ in Chapter 5.10: Unauthorised transa­ ctions and ePayments Code). The Banking Code has been held to form part of the contract between a bank and customer (see National Australia Bank Ltd v Rice [2015] VSC 10);
• Mortgage and Finance Association of Australia Code of Practice; and
• Customer Owned Banking Code of Practice. The Australian Financial Complaints Authority (AFCA) (see ‘Contacts’ at the end of this chapter) provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints. AFCA considers fairness, good industry practice and industry codes, as well as legal principles, in determining disputes (see Chapter 5.10: Unauthorised transactions and ePayments Code). Readers of this chapter may also be assisted by Chapter 5.2: Are you in debt?; Chapter 5.8: Mortgages, consumer leases and other finance products; Chapter 6.2: Buying or selling a house; Chapter 6.7: Buying a car; and Chapters 7.1 to 7.4, on consumers and contracts.