Chapter 1 Background Outline of chapter This chapter outlines the context and scope of reforms to SACCs and consumer leases that are contained in the Bill. It also provides a summary of the Regulation Impact Statement for the reforms contained in the Bill, which is also being consulted on as part of this consultation process. Context of amendments The exposure of the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease (the Bill) introduces a range of amendments to the Reforms) Bill 2017 Credit Act to enhance the consumer protection framework for SACCs and consumer leases. The amendments contained in the Bill are to be complemented by amendments to the Credit Regulations, which will be consulted on separately at a later date. The new SACC and consumer leasing provisions will promote financial inclusion and reduce the risk that consumers may be unable to meet their basic needs or may default on other necessary commitments. The Bill implements the Government’s response to the Review of the Small Amount Credit Contract Laws (the Review) that was conducted by an independent panel chaired by Ms Danielle Press. The Review was publicly released in March 2016. The Government’s response to the Review was released by the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, on 28 November 2016. The key reforms to be introduced by the Bill include: imposing a cap on the total payments that can be made under a consumer lease; requiring SACCs to have equal repayments and equal payment intervals; removing the ability for SACC providers to charge monthly fees in respect of the residual term of a loan where a consumer fully repays the loan early; preventing SACC providers and credit assistance providers from making unsolicited invitations to apply for credit and unsolicited credit offers to current or former SACC customers;
Chapter 1 Background Outline of chapter This chapter outlines the context and scope of reforms to SACCs and consumer leases that are contained in the Bill. It also provides a summary of the Regulation Impact Statement for the reforms contained in the Bill, which is also being consulted on as part of this consultation process. Context of amendments The exposure of the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017 (the Bill) introduces a range of amendments to the Credit Act to enhance the consumer protection framework for SACCs and consumer leases. The amendments contained in the Bill are to be complemented by amendments to the Credit Regulations, which will be consulted on separately at a later date. The new SACC and consumer leasing provisions will promote financial inclusion and reduce the risk that consumers may be unable to meet their basic needs or may default on other necessary commitments. The Bill implements the Government’s response to the Review of the Small Amount Credit Contract Laws (the Review) that was conducted by an independent panel chaired by Ms Danielle Press. The Review was publicly released in March 2016. The Government’s response to the Review was released by the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, on 28 November 2016. The key reforms to be introduced by the Bill include: imposing a cap on the total payments that can be made under a consumer lease; requiring SACCs to have equal repayments and equal payment intervals; removing the ability for SACC providers to charge monthly fees in respect of the residual term of a loan where a consumer fully repays the loan early; preventing SACC providers and credit assistance providers from making unsolicited invitations to apply for credit and unsolicited credit offers to current or former SACC customers;
c2017-t229374-Explanatory-Memorandum-1.docx