Australia has special legislation to protect consumers who borrow money. The National Credit Code (NCC) is included in the National Consumer Credit Protection Act 2009 (NCCP). It replaces the old state-administered Uniform Consumer Credit Code.
The National Credit Code affects all Australian providers of credit and consumers of credit with specific rules that apply to credit cards, loans, and reverse mortgages.
Who does the National Credit Code apply to?
The National Credit Code applies to all credit contracts where:
- The debtor is a natural person or strata corporation.
- The creditor is in the business of providing credit.
- A charge is made for the provision of credit.
Credit can be provided for personal, domestic or household purposes. For example, to purchase, renovate or improve on a residential property for investment, or to refinance a credit.
The National Credit Code does not apply to low-cost credit loans of less than 62 days, insurance premiums paid by instalments, some debit bills or staff loans.
How does NCC affect you?
The National Credit Code was introduced to provide better protection for consumers who borrow money. Here’s how it can impact you:
Under the new National Credit Code, all credit lending organisations must be licensed and be a member of an external dispute resolution scheme.
2. Responsible lending
Consumers now have the right to seek court remedies if lenders engage in any form of dishonest or unfair conduct, for example, insist on terms of contracts that would make it difficult for the consumer to pay back the loan.
Consumers also have the right to seek changes to their terms of payment particularly if the sum borrowed is less than $500,000 and they suffer financial hardship like loss of a job or the ability to work.
3. Comparison rates
The National Credit Code requires that all credit providers provide a comparison rate when advertising fixed term credit that clearly states interest rates and fees and commissions payable to allow consumers the opportunity to make comparisons.
If you are unsure whether the National Credit Code applies to your credit contract, you should seek the advice of an Australian business lawyer.