Bills Digest no. 33 2009–10
National Consumer Credit Protection (Transitional and
Consequential Provisions) Bill 2009
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
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introduced: 25 June
House: House of Representatives
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. The rest of the Act commences on the
day on which it receives Royal Assent.
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
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
- the National Consumer Credit Protection (Transitional and
Consequential Provisions) Bill 2009 (the Transitional Bill),
- the National Consumer Credit Protection (Fees) Bill 2009.
Collectively, these bills are known as the National Credit
For the policy background to this Bill, please refer to the
Bills Digest for the National Consumer Credit Protection Bill
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. The report was tabled on 7 September
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:
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
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
- 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.
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.
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
Schedule 1 of the Bill provides for the
transition from the old Credit Code to the new Credit
Code . 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
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
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
16 September 2009
Bills Digest Service
© Commonwealth of Australia
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