The Law Handbook 2024

Chapter 5.7: Understanding credit and finance 429 A standard home loan is a standard form of credit contract under which credit is provided for the purchase of residential property or to refinance credit that has been provided wholly or predominantly to purchase residential property (s 133AA NCCP Act). The key facts sheet must be in the form provided in schedule 5 to the NCCP Regulations and contain: • the consumer’s specifications (that is, loan amount, term of home loan, interest type, and lender and product name); • a description of the relevant home loan (including repayment method and frequency, interest rate and personalised comparison rate); and • information about the cost of the loan (including the total amount to be repaid for every $1 borrowed, establishment fees, ongoing fees and amount to be repaid each month and year) (s 133AB NCCP Act). Credit card contracts All credit card application forms must now include a key facts sheet containing up-to-date information about the credit card contract (s 133BC NCCP Act). This requirement has applied since 1 July 2012. A credit provider is prohibited from entering into a credit card contract with a consumer if they have not provided a key fact sheet containing up-to- date information (s 133BD NCCP Act). However, it is permissible for the key facts sheet to contain information that is no longer up-to-date if certain other requirements are met (ss 133BC(3)–(4), 133BD(1)(b) NCCP Act). The key facts sheet must be in the form provided in schedule 6 to the NCCP Regulations and provide information including a description of the credit card, including the product name and applicable credit limit, minimum repayments, interest on purchases, annual fees and so on. Pre-contractual statement Prior to the debtor either entering into a credit contract or making an offer to enter into a credit contract (whichever occurs first), the credit provider must give the debtor a statement disclosing the information set out in section 17 of the NCC (s 16(1)–(2) NCC). As this information must also be included in the credit contract, the credit provider can simply provide a copy of the proposed credit contract to the debtor (ss 16(5), 17 NCC). Alternatively, the credit provider can provide the information in a separate pre-contractual statement (s 16(5)). Information statement Before the debtor enters into, or makes an offer to enter into, a credit contract (whichever occurs first), the credit provider must give the debtor a copy of an information statement in the form required by the NCCP Regulations setting out the debtor’s statutory rights and obligations (form 5: things you should know about your proposed credit contract). What information should be in a credit contract? Content of credit contracts Section 17 of the NCC sets out the information a credit provider must disclose in a credit contract, as follows: • the credit provider’s name; • the amount of credit ; • the annual percentage rate or rates ; • a calculation of interest charges ; • a total amount of interest charges payable ; • repayments; • credit fees and charges ; • changes affecting interest and credit fees and charges ; • statements of account; • the default rate ; • enforcement expenses; • mortgages or guarantees; • commission; • insurance financed by contract ; and • an information schedule to be included above the signature clause of the contract in form 6 or 7 of the NCCP Regulations, (together, ‘ the disclosure requirements ’). Of the disclosure requirements, those in italic text are deemed ‘key requirements’ (s 111 NCC). The key requirements are slightly different for continuing credit contracts (s 111(2) NCC). These requirements are the same as those under the Old Code, the main source of consumer credit law before 1 July 2010.