Register Quarterly Newsletter
Consumer Credit Code
There are two overriding principles with the Uniform Consumer Credit Code
- Protection
- Fairness
WHY
Consumers require protection from:
- Lending institutions who fail to disclose all relevant information about a loan. The loan looks great until you pay it off early, where a $7500 payment fee is incurred, that has not been disclosed in the loan documentation.
- Obtaining the goods on credit, which seems like a great idea at the time, until you need to make payments, which you clearly could not afford.
HOW
The Uniform Consumer Credit Code (UCCC) aims to level the playing field by:
- Regulating lending for consumer purposes
- Apply rules to the lender which remain in place for the life of the loan. Once a loan is regulated under the UCCC, it cannot become unregulated.
- Ensuring that all fees and charges are disclosed in the loan documentation prior to final acceptance of the loan. This applies to fees and charges that are known, or should be known at the time of the loan contract. There are times when new fees and charges become payable (eg GST) that the lender would be unaware of at the time of making the original loan contract
- Placing minimum notification periods on changes to the contract - eg interest rate changes, fee changes.
- Placing a responsibility on the Lender to ensure the customer can afford the loan repayments. The lender must make all reasonable efforts to validate the customer's income, employment and current debt, and can only make moves to provide a loan when that information is satisfactory.
- Applying a 'Truth in Lending' principle. This principle helps prevent deceptive conduct by the lender by ensuring they give clear and accurate information to help the customer make an informed decision when choosing a loan product
- Provide customers with instructions regarding defaults, and outline appropriate actions that can be taken before collection takes place.
- Provide a framework and mechanisms for customers to take action against a lender, when the lender fails to comply with the UCCC.
WHAT
The UCCC is a legislated agreement (which means it is law) that was put in place in July, 1993 by all states and territories in Australia. The UCCC seeks to ensure that the rules applicable to all forms of consumer credit are uniform throughout Australia.
- The UCCC regulates (or applies rules) to credit offered to consumers. The rules apply to the lender, where finance is made available for predominantly (50% or more) domestic, personal or household use.
- The UCCC applies irrespective of the loan size.
- The UCCC does not apply where the finance is for business and/or investment purposes
WHO
The UCCC affects nearly every lender
- Banks
- Building Societies
- Credit Unions
- Mortgage Brokers
- Mortgage Originators
- Mortgage Managers
- Finance Brokers
- Insurance Companies
- Finance Companies
- Leasing Companies
- Retailers providing credit (eg MYERS)
- Any other person or company providing credit
The UCCC currently does not affect
- Pawnbrokers
- Trustees of Estates
- Family and friends lending money (except where lending money is their ordinary business)
Please check with the Government Consumer Agency in your State or Territory for details of the relevant legislation applying/enacting the Consumer Credit Code in your jurisdiction and any specific State or Territory provisions which may apply, including in relation to the Code's administration in your jurisdiction, and get independent legal advice.
The file available for download is the text of the template Code enacted in Queensland.
