The Law Handbook 2024

428 Section 5: Managing your money Providing the consumer the assessment of unsuitability Section 132 of the NCCP Act requires a lender to provide to a consumer, upon request, a written copy of the assessment: • where the request is made prior to entering a credit contract or increasing a credit limit, prior to enter- ing a credit contract or increasing a credit limit; • where the request is made within two years of entering a credit contract or increasing a credit limit, within seven business days of the request; • where the request is made more than two years but less than seven years after entering a credit contract or increasing a credit limit, within 21 business days of the request. A lender is prohibited from requesting or demanding payment for providing a copy of the assessment (s 132(4) NCCP Act). If a lender does not provide credit to the consumer, the lender is not obligated to provide the consumer with the unsuitability assessment. However, the Credit Reporting Privacy Code may provide a consumer with some access to reasons for refusal. For small amount credit contracts and consumer leases, there is an additional obligation that the assessment is to be documented (s 133CE NCCP Act). (See also ‘Payday loans’ in Chapter 5.8: Mortgages, consumer leases and other finance products.) Commencement of the obligation to assess unsuitability The obligation relating to the suitability of credit contracts and leases commenced for most licencees on 1 July 2010. However, some large licencees (i.e. Australian Deposit Taking Institutions, like Banks, and registrable corporations) required more time to implement compliance systems. Accordingly, for these lenders: • if the application for credit or lease was received between 1 October 2010 and 31 December 2010, the obligations commenced on 1 April 2011; • if the application for credit or lease was received on or after 1 January 2011, the obligations commenced on 1 January 2011 (reg 24A NCCP Regulations). Disclosure before entering a contract Obligation to provide a credit guide A credit provider must provide a consumer with a credit guide as soon as practicable after it becomes apparent to the credit provider that it is likely to enter into a credit contract with the consumer (s 126 NCCP Act). The credit guide must: • be in writing; • specify the credit provider’s name, contact details and Australian credit licence number; • include details regarding complaint handling, including AFCA’s contact details; • disclose the credit provider’s obligations to provide upon request a written copy of an assessment of the suitability of any proposed credit contract; and • advise that the credit provider is prohibited from entering, or increasing the credit limit under, a credit contract that is unsuitable for the consumer. Key fact sheets Credit providers are required to provide a key facts sheet about standard home loans and credit cards to prospective borrowers. A key facts sheet is a simple one-page information sheet that enables consumers to more easily compare like credit products offered by other credit providers. Standard home loans If a consumer requests one, a credit provider must provide a key facts sheet containing up-to-date information about the credit provider’s standard home loan (or loans) (s 133AD NCCP Act). This requirement has applied since 1 January 2012. If the credit provider also has a website that can be used by a consumer to apply for or make an enquiry about a standard home loan, the website must be capable of being used by the consumer to generate a key facts sheet. The website must also provide the consumer with instructions for generating the key facts sheets, including the information that must be provided by the consumer (ss 133AC–133AE NCCP Act).