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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
CONSUMER CREDIT PROTECTION AMENDMENT (FEES) BILL 2011
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator N Xenophon)
CONSUMER CREDIT PROTECTION AMENDMENT (FEES) BILL 2011
1. Short Title
This clause is a formal provision and specifies the short title of Bill, once enacted, as the Consumer
Credit Protection Amendment (Fees) Act 2011.
2. Commencement
This clause provides for the commencement of Sections 1 to 3 of the Act on the day the Act receives
Royal Assent and the commencement of Schedules 1 and 2 the day after this Act receives Royal
Assent.
3. Schedule(s)
This clause states that each Act specified in a Schedule to this Act is amended or repealed according
to the provisions of this Act, according to its terms.
4. Schedule 1 - Amendment of the National Consumer Credit Protection Amendment (Fees)
Bill 2011
This Schedule inserts section 30B into Division 4 of Part 2 of the National Credit Code, relating to
credit fees or charges relating to credit contracts.
Under this section, a credit fee or charge must be reasonable, which means that it must not materially
exceed the credit provider's reasonable costs of undertaking the activity or service to which the fee
relates, or the credit provider's average reasonable costs of undertaking the activity or service to which
the fee relates in respect of that class of contract.
Subsection (2) provides that ASIC may apply to the court for an order to annul or reduce the credit fee
or charge, and for other ancillary orders, if it is satisfied that a credit fee or charge is not reasonable.
In considering an application by ASIC, the court must have regard to the same criteria of what is
considered 'reasonable', ie. that it does not materially exceed the credit provider's reasonable costs of
undertaking the activity or service to which the fee relates or the credit provider's average reasonable
costs of undertaking the activity or service to which the fee relates in respect of that class of contract.
5. Schedule 2 - Amendment of the Banking Act 1959
Schedule 2 inserts section 9AF after section 9.
Item 1 inserts a cross-reference to the new section at the end of subsection 9(4) relating to APRA
being able to impose, vary or revoke conditions of authorities.
Item 2 inserts the new section 9AF into the Banking Act 1959. It requires APRA to place conditions
on banks with a market share of more than 10 percent to be prohibited from imposing an early
termination fee in respect of any loan agreement or mortgage contract.
Furthermore, under subsection (3), if a bank which has a market share of more than 10 percent has an
interest of 51 percent or more in a subsidiary which is an authorised deposit-taking institution, that
subsidiary must also be prohibited from imposing an early termination fee in respect of any loan
agreement or mortgage contract.
Subsection (4) inserts definitions relevant to this section with respect to the terms bank, early
termination fee, and market share.
Market share under this definition is to be determined by APRA on the basis of proportion of total
deposits.