National Consumer Credit Protection amendment
As of April 2, the Government temporarily amended the NCCP. Brokers are now exempt from responsible lending obligations for certain lending activity when dealing with existing small business customers.
- What’s new: new regulations implement a temporary six month exemption from responsible lending obligations for Australian Credit Licensees for credit arrangements which are provided partly for business purposes.
- When it applies:
- In relation to new credit, credit limit increases, variations and restructures, suggestions to remain in credit contracts, and the lease of consumer goods;
- Where the consumer is a person who operates a small business and is an existing borrower customer (or was a borrower customer in the last year); and
- For all types of credit or leased goods which are in part used for business purposes.
The exemption applies for all kinds of credit products, including personal loans, credit cards and loans secured by the borrower’s home.
Small business is defined as having fewer than 100 employees or revenue of $5M or less.
- Scope of exemption: Brokers are exempt from responsible lending obligations to certain lending activity for existing small business customers. These are new credit, credit limit increases, variations and restructures, suggestions to remain in credit contracts, and lease of consumer goods. The broker still needs to give a credit guide, credit proposal disclosure document, credit quote etc.
The exemption is temporary and applies for a period of six months only and is now in force.
- Key areas it doesn’t apply: No change when dealing with consumers. Also, any lending that is 100 per cent consumer related does not get the benefit of this exemption.