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National Consumer
                      Credit Protection Act
                     Car Dealership Exemption?
             ...
National Consumer Credit Protection Act

        Where Dealerships (point-of-sale) currently stand
           • Phase 1 of...
National Consumer Credit Protection Act

        Where Dealerships (point-of-sale) currently stand
           • “Phase 2” ...
National Consumer Credit Protection Act

       Where Dealerships (point-of-sale) currently stand
          • Continues to...
National Consumer Credit Protection Act

             Where Dealerships (point-of-sale) stand

             But as at toda...
National Consumer
                         Credit Protection Act
                                     Let’s be prepared:
 ...
National Consumer Credit Protection Act

                ASIC Registration & Application requirements
                  Re...
National Consumer
                         Credit Protection Act
                                          Registration


...
National Consumer Credit Protection Act
                                             ASIC Registration
           • Those ...
National Consumer Credit Protection Act
                                             ASIC Registration

        Requiremen...
National Consumer Credit Protection Act
                                             ASIC Registration
        Responsible...
National Consumer Credit Protection Act
                                             ASIC Registration
        Disclosure ...
National Consumer Credit Protection Act
                                             ASIC Registration
        Registratio...
National Consumer Credit Protection Act
                                             ASIC Registration
           • Not ev...
National Consumer
                         Credit Protection Act
                  Application for Licence


For more info...
National Consumer Credit Protection Act
                                    ASIC Licence Application

          • Applicat...
National Consumer Credit Protection Act
                                    ASIC Licence Application

            • Licenc...
National Consumer Credit Protection Act
                                    ASIC Licence Application
          • Provide d...
National Consumer Credit Protection Act
                                    ASIC Licence Application
      To comply with ...
National Consumer Credit Protection Act

     Due to the level of details within the Act, please note that this
     prese...
National Consumer Credit
                              Protection Act

                                     Where is it at...
National Consumer Credit Protection

             The Facts
                • National framework for consumer credit
     ...
National Consumer Credit Protection

            Dealership exemption
               • Car Dealerships will be initially e...
National Consumer Credit Protection

              ASIC Requirements
                 • 1 April to 30 June 2010:
         ...
For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au   Founding member o...
FOR ACCOUNTANTS,   COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
BY ACCOUNTANTS               NETWORK FORUM




National Consumer Cred...
FOR ACCOUNTANTS,       COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Cons...
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National Consum...
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National Consu...
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FOR ACCOUNTANTS,         COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,       COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,      COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,        COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,      COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,    COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Consumer C...
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FOR ACCOUNTANTS,       COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Consu...
FOR ACCOUNTANTS,         COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,       COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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FOR ACCOUNTANTS,      COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Consume...
FOR ACCOUNTANTS,   COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Consumer Cred...
FOR ACCOUNTANTS,        COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Con...
FOR ACCOUNTANTS,   COLLEDGE’S AUTOMOTIVE ACCOUNTANTS
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National Consumer Cred...
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National Consumer Credit Protection Act (to April 2010)

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Colledge's has been doing a lot of work on the National Consumer Credit Protection Act that is currently being introduced to Australia. Our focus has been on dealership exemption.

This is a collation of presentations from July 2009 to April 2010.

Published in: Education
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Transcript of "National Consumer Credit Protection Act (to April 2010)"

  1. 1. National Consumer Credit Protection Act Car Dealership Exemption? (20 April 2010) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  2. 2. National Consumer Credit Protection Act Where Dealerships (point-of-sale) currently stand • Phase 1 of the Act is complete, having passed Australian Parliament and received Royal Assent. • Within Phase 1, Car Dealerships are exempt (as point-of-sale) from having to:  Register with ASIC; and  Apply for a credit licence; or  Become a representative of a credit licensee. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  3. 3. National Consumer Credit Protection Act Where Dealerships (point-of-sale) currently stand • “Phase 2” is now underway. • Government will review various aspects of the regulations. • On The Treasury’s agenda is consideration of the point-of- sale exemption. • Colledge’s was informed by the Consumer Credit Unit in Canberra that the Motor Traders’ Association is on The Treasury’s review board.  Submission due June 2010. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  4. 4. National Consumer Credit Protection Act Where Dealerships (point-of-sale) currently stand • Continues to be opposition to dealerships being exempt. • In ASIC’s recent National Credit Roadshow, dealership exemption was discussed within point-of-sale.  Point-of-sale has such a “broad range of degrees of involvement of people”.  Government needs time to look at the various point- of-sale activities and how they should be regulated. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  5. 5. National Consumer Credit Protection Act Where Dealerships (point-of-sale) stand But as at today, Dealerships, within point-of-sale, are exempt from the Credit Act. This is ongoing until the Government changes the Act. Source: Consumer Credit Unit, The Treasury, Canberra For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  6. 6. National Consumer Credit Protection Act Let’s be prepared: ASIC Requirements For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  7. 7. National Consumer Credit Protection Act ASIC Registration & Application requirements Registration between 1 April to 30 June 2010 Applications for Australian Credit Licence (ACL) between 1 July to 31 December 2010 (Refer handout from Conference, 22/2/10) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  8. 8. National Consumer Credit Protection Act Registration For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  9. 9. National Consumer Credit Protection Act ASIC Registration • Those wanting to be involved in Credit Activities after 1 July 2010 need to be registered by 30 June 2010. • Registration is free. • Being registered, allows you to continue in Credit Activities. • If you are not registered by ASIC by 30 June 2010, you must cease Credit Activities until registered. These points exclude those that are exempt in the Act. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  10. 10. National Consumer Credit Protection Act ASIC Registration Requirements • Adhere to conduct requirements, such as being honest, fair and responsible lenders. • Staff training and competency as an organisation. • Become members of External Dispute Resolution (EDR) body.  Alternative to the courts (less formal) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  11. 11. National Consumer Credit Protection Act ASIC Registration Responsible lending 1. Make “reasonable enquiries” about the customer’s objectives and requirements; 2. Take “reasonable steps” to ascertain the customer’s financial situation; 3. Assess the customer’s ability to repay the loan without “substantial hardship”; and 4. Do not offer or suggest products that are “unsuitable”. Source: ASIC National Credit Roadshow (webinar) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  12. 12. National Consumer Credit Protection Act ASIC Registration Disclosure requirements Lenders will have to tell customers: a) How much the broker receives for securing the loan; b) All costs the consumer will have to pay to the broker, bank and others, and c) How much money will be left over after these payments have been made. That is, all customer fees and charges, and your commission for securing the loan. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  13. 13. National Consumer Credit Protection Act ASIC Registration Registration application requirements • Being a member of an ASIC approved EDR body. • Up-to-date company details, e.g. Company Register • Making statements regarding conduct of directors, company secretaries, partners, trustees  ASIC suggests background checks on people, including if: - been insolvent or bankrupt - had serious fraud convictions in past 10 years - been disqualified from managing a corporation - had credit registration or financial service licence cancelled For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  14. 14. National Consumer Credit Protection Act ASIC Registration • Not every person requires a licence • A licensee can act through its employees, directors and related corporations • One or more third parties can be authorised by a credit provider to act on its behalf = “Credit Representatives”.  The Credit Reps do not need to be individually registered  Licensee must authorise in writing their Credit Rep/s and what credit activities they will be involved in  Credit Reps must join an External Dispute Resolution body For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  15. 15. National Consumer Credit Protection Act Application for Licence For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  16. 16. National Consumer Credit Protection Act ASIC Licence Application • Applications for Australian Credit Licence (ACL) start 1 July 2010 • Those who have not applied for ACL by 31 December 2010 must cease credit activities until they have a licence. • By 30 June 2011, all applications will be processed. • ACL numbers will be required on all marketing information, i.e. letterhead, website, etc. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  17. 17. National Consumer Credit Protection Act ASIC Licence Application • Licence fees will depend on level of credit activity  Range from $1,000 – $21,000  Non-refundable, including if application rejection • ASIC will ask questions to assess suitability regarding becoming a licensee. • Comply with the conduct obligations in the Act. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  18. 18. National Consumer Credit Protection Act ASIC Licence Application • Provide details on the directors, secretaries, partners, trustees or senior managers  Need statements from each person that they are “fit and proper” to conduct credit activities under the licence. • From this group, nominate people as “Responsible Manager/s” who have the expertise to be authorised under the licence. • “Responsible Managers” have to provide their educational qualifications and experience to support the application. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  19. 19. National Consumer Credit Protection Act ASIC Licence Application To comply with the conduct obligations in the Act, licensees will have: • and maintain compliance arrangements and systems; • trained and competent Reps, who are supervised; • adequate HR, I.T., and financial resources; • Risk Management systems in place; • appropriate internal and external dispute resolution systems; • Policy & Procedures to receive & assess variations in credit contracts; • arrangements for compensation to customers (should you breach obligations under the Act). For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  20. 20. National Consumer Credit Protection Act Due to the level of details within the Act, please note that this presentation is a summary of the requirements for ASIC Registration and Application for a Licence. We encourage you to download and familiarise yourself with the documentation on ASIC’s website http://www.asic.gov.au/credit. A great resource within the ASIC website is their Credit Roadshow webinar. We again encourage you to take 60 mins to watch the presentation which was a valuable source for this presentation. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  21. 21. National Consumer Credit Protection Act Where is it at? (22 February 2010) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  22. 22. National Consumer Credit Protection The Facts • National framework for consumer credit • Scheduled to commence 1 July 2010 • ASIC is the sole regulator • Lenders will be required to disclose to consumers:  How much they receive for securing the loan  All costs the consumer will have to pay to the lender, broker, bank and others For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  23. 23. National Consumer Credit Protection Dealership exemption • Car Dealerships will be initially exempt from the National Credit Regulations.  Initial 12 month exemption  No further information available • Colledge’s worked with VACC on Government submission detailing importance of car dealerships remaining exempt. (Handout: Submission letter) For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  24. 24. National Consumer Credit Protection ASIC Requirements • 1 April to 30 June 2010: Register with ASIC to be ready by 1 July 2010 • 1 July to 31 December 2010: Applications for the Australian Credit Licence (ACL) • Become a representative of a registered person or the holder of an ACL For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  25. 25. For more information, contact Angelo Sirianni on 03 9851 6500 or email angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  26. 26. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Update (15/10/09)
  27. 27. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Refresher • “Establish ... a single, standard, national law for the regulation of consumer credit” and better protection for consumers. (ALP Media Statement, 25 June 2009) • Aims to eliminate “unscrupulous and incompetent” lenders and increase standards in the (credit) industry. • For the first time, credit providers will be regulated nationally rather than by differing state requirements.
  28. 28. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Refresher (cont) • Strict and comprehensive licensing conditions. • ASIC will be the sole regulator of “Australian Credit Licence” applications. • Stricter penalties for misconduct (for lenders). • Increased court assistance (for consumers).
  29. 29. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Disclosure of Commission The Bill requires lenders to inform consumers of the full credit proposal disclosure, including: a) How much the broker receives for securing the loan; b) All costs the consumer will have to pay to the broker, bank and others.
  30. 30. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Recent developments • Bill passed House of Reps on 20 August 2009. • Introduced to Senate 7 September 2009. • Senate moved start date back 6 months. • ASIC indicates credit providers will now have the following timeline: 1 April to 30 June 2010 to be registered with ASIC by 1 July 2010, and Applications for the Australian Credit Licence between 1 July to 31 December 2010.
  31. 31. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Current Bill states: “Exemptions from licensing point of sale retailers, such as car dealerships... where they engage in credit activities by arranging credit or acting as an intermediary through an arrangement with a lender.” Media release of 14/8/09: National Consumer Credit Protection Package - Draft Regulations Exemption of “point of sale retailers” has reportedly been proposed so that the Government can understand this market before deciding how to regulate it. (Source ANZ)
  32. 32. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Bill open for public consultation • Colledge’s latest research has found a number of objections to Car Dealerships being exempt from the Bill as part of “point of sale” retailers. • Published (on internet) letters from:  ANZ, Government & Regulatory Affairs  Indigenous Consumer Assistance Network (ICAN)  Commercial Asset Finance Brokers Association of Australia (CAFBA)
  33. 33. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill ANZ highlighted the following issues • Car dealerships are more than referrers of finance. • Will credit providers be made responsible for the conduct of car dealerships? • Dealerships can act as a third party finance, therefore acting as a broker. Will this activity require licensing?
  34. 34. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill ANZ issues (continued) • Unlike other point of sale retailers, dealerships can:  Deal with more than 1 finance company.  Do not provide consumers with the advantage of subsidised rates or deferred payments.  Can receive commission/incentives from finance companies.
  35. 35. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Issues raised by ICAN Below issues come from actual cases ICAN provided advice and advocacy on for indigenous people • Exploited consumers with minimal spoken English. • Financing consumers who could not afford repayments  Borrowers from remote communities with higher costs of living (up to 20-30% higher). • Inflating car prices over market value. • Packaging loans with unnecessary extras such as insurance and warranties.
  36. 36. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Issues raised by CAFBA • Exemption of car dealers provides an unlevel playing field for credit providers and undermines the original intention of the Bill. • Less protection for customers, namely youth and socially disadvantaged. • No evidence that car dealers, who offer finance in 10s of thousands, need to be exempt. • Should consider exempting point of sale financing under a certain $ amount.
  37. 37. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Colledge’s will continue to research the Bill and keep you up-to-date on future information.
  38. 38. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill References • www.treasury.gov.au/consumercredit/content/default • National Consumer Credit Protection Package, Draft Regulation: Media Release 14/8/09 by the Hon Chris Bowen MP • Consumer Credit Reforms, Senate Amendments: Media Release 17/9/09 by the Hon Chris Bowen MP • Indigenous Consumer Assistance Network Ltd: Submission to Senate Standing Committee on Economics, 17/7/09 • ANZ Government & Regulatory Affairs: Submission to Treasury 9/9/09 • Commercial Asset Finance Brokers Association of Australia Ltd: “A fair and more effective National Consumer Credit Protection Bill”, A submission to the Hon Chris Bowen MP 9/9/09
  39. 39. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill (28/7/09) References: National consumer credit protection reform, Media Statement, 25 June 2009, Minister of Financial Services, Superannuation and Corporate Law, Chris Bowen MP http://alp.org.au/media/0609/mscca250.php The National Consumer Credit Protection Bill 2009, http://www.treasury.gov.au/consumercredit/content/downloads/Consumer_Credit_Brochure.pdf Article: Oakes, D. New credit laws to strengthen consumer rights, The Age, 25 June 2009
  40. 40. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill • Proposed Act to “establish ... a single, standard, national law for the regulation of consumer credit” and better protection for consumers. (ALP Media Statement, 25 June 2009) • Bill was introduced and read in House of Representatives on 25 June 2009 • Referred to Committee in Senate
  41. 41. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill • The Bill is ‘Phase 1’ of 2008 agreement with COAG (Council of Australian Governments)  Commonwealth to be responsible for consumer credit regulation. • Aims to eliminate “unscrupulous and incompetent” lenders and increase standards in the (credit) industry.
  42. 42. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill • ASIC will be the sole regulator. • Lenders have until 31 December 2009 to register for a licence. • Strict and comprehensive licensing conditions. • Licensees will not be allowed to give credit to consumers who cannot afford repayments. • Stricter penalties for misconduct (for lenders). • Increased court assistance (for consumers).
  43. 43. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Disclosure of Commission The Bill requires lenders to inform consumers of the full credit proposal disclosure, including: a) How much the broker receives for securing the loan; b) All costs the consumer will have to pay to the broker, bank and others; and
  44. 44. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill But, you may not have to panic just yet...
  45. 45. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill • The initial, proposed legislation was amended on 25 June 2009 after consultation with industries. • Car dealerships (as ‘point-of-sale’ retailers) “...will be exempt from the requirements that facilitate assistance to consumers. The Government will examine the issues of regulatory oversight within the next 12 months”. (National Consumer Credit Protection Reform: Media Statement, 25 June 2009, Chris Bowen MP)
  46. 46. FOR ACCOUNTANTS, COLLEDGE’S AUTOMOTIVE ACCOUNTANTS BY ACCOUNTANTS NETWORK FORUM National Consumer Credit Protection Bill Colledge’s will keep a close eye on the Bill and will alert you of future information.
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