The Consumer Credit Regulation is controlled by the National Credit Code. While these regulations might appear difficult to comprehend, it’s essential to know how they work, and the way in which they can help you, financial wise. Today, we will present to you the National Credit Act, and what you should know on the topic.
Introducing the National Credit Act
To begin with, the National Credit Act was established on the 1st of July, 2010. This act impacts both providers and consumers of credit based in Australia. Concurrently, over the years, this act has been changed, altering the rules that apply to loans, credit cards, and reverse mortgages.
What are the obligations of credit providers?
Whoever wants to get involved in credit activities, including brokers, lessors, and lenders, must present a licence with AISIC. Another alternative is to represent someone who owns a licence.
At the same time, the law says that credit providers mustn’t offer unsuitable financial contracts to applicants. In other words, if the loan terms make it impossible for the borrower to make repayments in the agreed timeframe, the credit provider mustn’t offer it to you. The same applies if the loan agreement doesn’t meet your specifications and requirements.
According to the law, credit providers must meet the following conditions:
- Ask questions concerning the applicant’s financial situation, loan specifications, and requirements.
- Take the necessary measures in order to verify the applicant’s financial situation.
- Establish whether the credit requirements made by the applicant are suitable or unsuitable.
On the other hand, credit assistance providers are responsible for making a preparatory assessment. Meanwhile, credit providers are expected to draw the line and conclude whether the contract one wants to get is appropriate for his/her financial status. We recommend you to evaluate ASIC’s credit reform update to expand your knowledge on the topic.
Determine If the Loan Provider or Broker Has a Licence
Before you ask for a loan provider’s assistance, you should ensure that it has a licence to operate in the field. In order to do that, you should simply check ASIC Connect’s Professional Registers.
If you intend to file a complaint regarding your collaboration with a certain credit provider, you have the option to do that, as well. Here is more information about filing a complaint.
Are There any Exemptions Worth Noting?
At the time being, there are some businesses that are exempt from licencing, such as car yards or retail yards. That being said, even though a store could be exempt, the credit provider should still have a licence. If you’re uncertain regarding the credit provider, you should inquire about the matter.
Furthermore, whoever engages in credit activities, by either offering credit assistance or credit, must facilitate the following: a credit proposal disclosure document and a credit guide. It should consist of the following information:
- Licence number
- Fees and charges
- Contact details
- Information regarding your right to complain/contact details on how to get access to their EDR – External Dispute Resolution Scheme.
On a final note, it’s recommended to be updated regarding the changes made to the National Credit Act. This way, you are acquainted with the most important regulations that apply in the marketplace.