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Consumer credit code

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Since 2009, the National Consumer Credit Protection Package (NCCPP), administered by the Australian Securities and Investment Commission (ASIC), has regulated all Australian home loans, personal loans, credit cards, consumer leases, pre-arranged overdrafts and line of credit accounts. This important legislation changed on January 1 to provide consumers with even greater protection.

An important change in the NCCPP is the requirement for anyone involved in credit activities to be licensed. That is, they must either hold a licence from ASIC, be a person registered with ASIC to provide credit activities, or be the authorised representative of a credit-providing organisation. This enables ASIC to monitor the activities of licensees and ensure that they meet the conduct requirements laid down in the legislation, such as responsible lending practices, and that they meet continuing professional education requirements.

Under the licensing regime, credit providers, including mortgage brokers, must provide consumers with a Credit Guide, which is a document similar to a Financial Services Guide, outlining general information about their business. They must complete a detailed assessment of your financial status, also known as a “fact-find”, and keep it on record.

The credit providers must then give you a written quote, similar to a Statement of Advice. The credit quote is a tailored document that sets out the specific services that are being offered to you and the maximum fees for each service.

Finally, you should be provided with a document outlining their recommendations, the basis on which the recommendations have been made, and full disclosure of any fees, commissions, brokerage or other remuneration they may receive. This advice must be provided before you enter the credit contract, and may also contain details about your unsuitability for credit because of your credit history, financial circumstances or incapacity to repay.

Only once you have accepted the recommendations will you be provided with any credit contract documents.

The new regime, while increasing the paperwork associated with obtaining consumer credit, will enhance the protection available to you. Planned future legislative developments will increase ASIC’s capacity to stop unfavourable lending practices, and to regulate the provision of credit for small businesses, investment loans, and the provisions and disclosure relating to reverse mortgages.

In addition, the NCCPP includes a dispute resolution mechanism involving both internal resolution procedures and access to an external dispute resolution scheme.

Bongiorno, via its subsidiary, Proloan (NSW) Pty Ltd has applied for and been granted an Australian Credit License (License number 388488) and so your Bongiorno adviser is registered, capable and ready to help you if you would like any more information about consumer credit.

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