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Consumer Credit Administration Amendment (Finance Brokers) Bill

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About this Item
Subjects -  Credit; Consumer Affairs
Speakers - Meagher Ms Reba; Hodgkinson Ms Katrina
Business - Bill, Committee, In Committee, Motion


    CONSUMER CREDIT ADMINISTRATION AMENDMENT (FINANCE BROKERS) BILL
Page: 2112


    In Committee

    Consideration of the Legislative Council's amendments.
    Schedule of amendments referred to in message of 20 May

    No. 1 Page 3, Schedule 1 [1], lines 25 and 26. Omit all words on those lines.

    No. 2 Page 4, Schedule 1 [5], lines 17-23. Omit all words on those lines.

    No. 3 Page 6, Schedule 1 [6], lines 15-25. Omit all words on those lines. Insert instead:

    (c) if the consumer credit is intended to be repaid at regular intervals - the maximum periodic repayments the client is prepared to make in respect of the consumer credit (including the repayment of any credit application fee, credit establishment fee or other fee), and

    (d) if the consumer credit is not intended to be repaid at regular intervals - the repayment arrangements acceptable to the client (including for the repayment of any credit application fee, credit establishment fee or other fee), and

    (e) the maximum interest rate that will be payable in respect of the consumer credit, and

    No. 4 Page 8, Schedule 1 [6], lines 4-14. Omit all words on those lines. Insert instead:

    (c) in the case of consumer credit intended to be repaid at regular intervals - the periodic repayments exceed the maximum periodic repayments specified in the contract, or

    (d) in the case of consumer credit not intended to be repaid at regular intervals - the repayment arrangements are more onerous than the repayment arrangements specified in the contract, or

    (e) the consumer credit is secured at a rate of interest that exceeds the maximum rate specified in the contract, or

    No. 5 Page 8, Schedule 1 [6]. Insert after line 20:

    (3) A finance broker is not prevented by this section from demanding, receiving or accepting any commission in respect of finance broking merely because of the potential for an increase in the periodic repayments or interest rate, or for repayment arrangements that are more onerous, that arises because of a variation of the interest rate in accordance with the consumer credit contract.

    No. 6 Page 9, Schedule 1 [6], lines 20-31. Omit all words on those lines. Insert instead:

    (iii) if the consumer credit is intended to be repaid at regular intervals- involves periodic repayments that do not exceed the maximum periodic repayments specified in the contract, and
    (iv) if the consumer credit is not intended to be repaid at regular intervals - involves repayment arrangements that are not more onerous than the repayment arrangements specified in the contract, and

    (v) is secured at a rate of interest that does not exceed the maximum rate specified in the contract, and

    No. 7 Page 10, Schedule 1 [6]. Insert after line 4:

    (2) A finance broker is not prevented by this section from demanding, receiving or accepting any commission in respect of finance broking merely because of the potential for an increase in the periodic repayments or interest rate, or for repayment arrangements that are more onerous, that may have arisen because of a variation of the interest rate in accordance with the consumer credit contract.

    Ms MEAGHER (Cabramatta—Minister for Fair Trading, and Minister Assisting the Minister for Commerce) [12.19 p.m.]: I move:

    That the Legislative Council's amendments be agreed to.

    The Government moved an amendment in the Legislative Council to clarify the intention of the bill, to ensure that finance brokers will not be prevented from claiming their commission simply because of normal variable rate fluctuations. The consumers' requirement, as stated in the finance broking contract regarding the maximum repayment amount they are prepared to pay and the interest rates that satisfy that requirement, are applicable only at the time the contract is made. Obviously, neither brokers nor consumers can predict with certainty what interest rates will do. It is up to the consumer and the credit provider to factor that uncertainty into their calculations. Credit providers must take into account possible rate fluctuations with every variable rate product when assessing consumers' capacity to repay their loan in the future. The bill was drafted with that in mind and the Government amendment has removed any ambiguity in that regard.

    Ms HODGKINSON (Burrinjuck) [12.20 p.m.]: The Opposition does not oppose the Legislative Council amendments. Brokers and consumers can never predict with certainty what interest rates will do, and it is up to the consumer and the credit provider to make sure that the uncertainty is factored into their calculations. Credit providers have to take into account possible rate fluctuations with every variable rate product when looking at a consumer's capacity to repay a loan in the future. The Opposition recognises that these amendments will ensure that finance brokers are not prevented from being able to claim their commission simply because of a normal variation in rate fluctuations. The Opposition has discussed these amendments with finance brokers and they do not have any complaints about the amendments. In fact, the amendments strengthen their ability to claim their commission. The Opposition does not oppose the amendments.

    Motion agreed to.

    Legislative Council's amendments agreed to.

    Resolution reported from Committee and report adopted.

    Message sent to the Legislative Council advising it of the resolution.


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