Bills Digest no. 33 2009–10
National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Main provisions
Contact officer & copyright details
Passage history
Date introduced: 25 June 2009
House: House of Representatives
Portfolio: Treasury
Commencement: Schedules 1 and 3 commence when section 3 of the National
Consumer Credit Protection Act 2009 (the Main Act) commences. Schedule 2
commences on the day the Act receives Royal Assent, or the day on which section
3 of the Main Act commences, whichever is later.[1] The rest of the Act commences on the day on which it receives Royal Assent.
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
To provide the transitional and
consequential arrangements to support the transfer of regulation of credit from
the State and Territories to the Commonwealth.
This Bill was introduced in a set of bills comprising of:
- the National Consumer Credit Protection Bill 2009 (the Main Bill)
- the National Consumer Credit Protection (Transitional and
Consequential Provisions) Bill 2009 (the Transitional Bill), and
- the National Consumer Credit Protection (Fees) Bill 2009.
Collectively, these bills are known as the National Credit
Legislation.
For the policy background to this Bill, please refer to the Bills
Digest for the National Consumer Credit Protection Bill 2009.[2]
The National Credit Legislation bills were referred to the
Senate Economics Legislation Committee (the Senate Committee) for inquiry.
Details of the inquiry, and the final report, are at the Senate
Economics Committee webpage.[3] The report was tabled on 7 September 2009.
The Senate Committee recommended that all three bills comprising
the National Credit Legislation be passed subject to some recommendations made
in the report.
Fifty-eight submissions were made to the Senate Committee
about the National Credit Legislation package. The Bills Digest for the Main Bill
contains a discussion of the submissions.
The Transitional Bill sets
out a number of provisions for the transitional and consequential arrangements
to support the enactment of the Main Bill.
Clause 4 of the Transitional Bill contains a Dictionary
of relevant terms. In particular it defines ‘the old Credit Code’ by specific reference to the State and Territory legislation which is to be
replaced by the enactment of the National Credit Legislation.
Clause 4 also defines the term ‘National Credit
Act’ which means the National Consumer Credit Protection Act 2009 and includes instruments made under that Act.
Clause 6 provides that regulations may be made by the
Governor-General to deal with transitional matters under the Transitional Act.
The clause allows some regulations to have retrospective effect; however it
does not allow that retrospectivity to cause a person to be liable for criminal
or civil penalties under the National Credit Legislation: subclause 6(5).
The Senate Scrutiny of Bills Committee made the following
comments about clause 6:
Subclause 6(2) provides that regulations may prescribe
matters of a transitional nature and that the regulations have effect ‘despite
anything else in this Act’. There is no explanation of this provision in the
explanatory memorandum. Subclause 6(3) provides that: ‘(t)he regulations may
provide that certain provisions of this Act are taken to be modified as set out
in the regulations. Those provisions then have effect as if they were so
modified’. Similarly, there is no explanation for this ‘Henry VIII’ clause in
the explanatory memorandum. Subclause 6(6) provides that ‘(t)he provisions of
this Act that provide for regulations to deal with matters do not limit each
other’. Again, the explanatory memorandum provides no explanation for the
existence of this provision.
Since all these provisions purport to authorise a regulation
to amend the Act, or purport to authorise a regulation that is beyond the scope
of the Act, the Committee seeks the Treasurer’s advice on why such a
broad use of the regulation-making power is considered necessary in the
circumstances.[4]
The response from the Treasurer was as follows:
Given that the basis of the new national credit law scheme
emanates from a referral of State constitutional power and involves
transferring law from eight jurisdictions, it is necessary that subclause 6(2)
be included in the National Consumer Credit Protection (Transitional and
Consequential Provisions) Bill 2009 (Transitional Bill) to deal with matters of
a transitional nature because:
- it is not possible to
consider all of the transitional issues at the time of enactment which emanate
from the referral of constitutional power and the transfer of the eight
regulatory regimes into one national scheme;
- the need to ensure
that any necessary consequential amendments that are inadvertently not provided
for in the Credit Bill and the Transitional Bill can be made without the need
for the enactment of another Act; and
- the requirement to
maintain a comprehensive national law on credit regulation which provides certainty
for industry participants and consumers.
Subclauses 6(3) and 6(6) explain the legal effect of the
making of these regulations. These subclauses are necessary to ensure that the
matters under the regulations achieve their policy intent.[5]
Subsequently the Scrutiny of Bills Committee requested that
the explanatory memorandum to the Bill be amended to include this information
in order to provide context for the use of the regulation-making power in the
circumstances.[6]
Clause 7 states that a provision of the Transitional Act
does not apply to result in an acquisition of property from a person otherwise
than on just terms. This provision puts beyond doubt the intention of the
Commonwealth Government that no provision of the Transitional Act is to operate
as an acquisition of property other than on just terms in accordance with the
requirements of paragraph 51(xxxi) of the Constitution of Australia.
Schedule 1 of the Bill provides for the transition
from the old Credit Code to the ‘new Credit Code’.[7] Item 3 of Schedule 1 applies the new Credit Code to old
instruments and contracts that were in force at the time the new Credit Code is
introduced, subject to the exceptions set out in subitem 3(3). The
exceptions ensure that certain changes to the Credit Code are not applied
retrospectively (such as including credit for residential investment properties,
or the increased hardship threshold).
The remainder of Schedule 1 deals with the treatment of
court and tribunal proceedings brought under the old Credit Code (items 4–7),
and the application of the National Credit Act. Item 18 provides that
the National Credit Act does not apply to a credit contract made under the old Credit
Code, except when proceedings are brought under the new Credit Code in relation
to that old credit contract. The Schedule also sets out transitional provisions
allowing for regulations to be made about the transfer of information to the
Australian Securities and Investments Commission (ASIC) from referring States
and Territories (item 22). Item 23 clarifies ASIC’s role in
relation to appeal, review and enforcement proceedings.
Schedule 2 of the Transitional Bill sets out the
transitional provisions relating to registration of persons who engage in
credit activities. The Guide to the Schedule (item 1, Schedule 2) explains
that the registration provisions are provided as a transitional authorisation
for industry until the provisions for the Australian Credit Licence (ACL) come
into effect. Therefore, the provisions in Schedule 2 are equivalent to an
interim licensing scheme.
Item 4 of Schedule 2 makes it an offence to
engage in credit activities if not registered or licensed between 1 January
2010 and 30 June 2010. Similarly, item 6 of Schedule 2 creates a
similar offence for the period between 1 July 2010 and 30 June 2011, for those
who are not registered, licensed, and have not applied for a licence. The
criminal and civil penalties are equivalent to those in the Main Bill for
engaging in credit activities without an ACL (clause 29 of the Main Bill).
Items 11–31 of Schedule 2 deal with the
registration process, the conditions of registration, obligations of registered
persons, and suspension or cancellation of registrations. The provisions mimic
Chapter 2 of the Main Bill in relation to licensing.
Item 41 enables ASIC to exempt or modify the
application of Schedule 2, including exempting classes of people from
the provisions of the Part, or creating special rules in relation to offences.
This provision mimics clause 109 of the Main Bill.
Schedule 3 makes minor amendments to the Australian
Securities and Investments Commission Act 2001 and the Corporations Act
2001 which are consequential to the enactment of the National Credit
Legislation. In particular, it includes the Main Bill and this Bill in the list
of legislation under which ASIC has functions and powers.
© Copyright Commonwealth of Australia
PaoYi Tan
16 September 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
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