Introduction to credit and finance and key legislation
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Overview
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.
Consumer protections under Australian Credit Law
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?’ in ‘What is a credit contract?‘).
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 https://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 transactions 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 (prior to 1 January 2014 the Mutual Banking Code of Practice applied).
The Australian Financial Complaints Authority (AFCA) 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).
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