Kinh tế học - Chapter 14: Consumer credit law

This is the prescribed textbook for your course.Available NOW at your campus bookstore!Copyright © 2000 McGraw-Hill AustraliaConsumer credit lawChapter 141Copyright © 2000 McGraw-Hill AustraliaCustomer Credit CodeIntroduced on 1 November 1996 Developed uniform credit laws in AustraliaIncludes: All credit providers for provision of credit, wholly or predominantly for personal, household or domestic purposesEnsures: Obligations and liabilities clearly set out 2Copyright © 2000 McGraw-Hill AustraliaDefinitionsCreditor: Person providing the creditDebtor: Person receiving the credit3Copyright © 2000 McGraw-Hill AustraliaCredit providerA credit provider is any person who provides credit, where a charge is madefor the provision of the credit.4Copyright © 2000 McGraw-Hill AustraliaTypes of transaction covered by the CodeTransactions where credit provided to individuals wholly or predominantly for personal, household or domestic purposes, i.e. not for business or investment purposes.5Copyright © 2000 McGraw-Hill AustraliaTypes of credit covered by the CodeContinuing credit contracts e.g. revolving creditLoan contracts e.g. home loans personal loans bank term loansConsumer leases: i.e. Hire of goods by a natural person (or strata corporation), where the lessee does not have a right or obligation to purchase the goods.Credit sales contracts: i.e. Credit is provided to a buyer in the course of a sale of goods or services.Mortgages and guarantees: Related transactions providing security for the debt.Hire purchase agreements: i.e. A sale of goods by instalments, where there is a right or obligation to purchase the goods, with the cash price being less than the ultimate combined amounts paid for the goods).Credit-related insurance contracts: required by the credit provider for the consumer to enter.Type of credit not covered by the code: Section7.6Copyright © 2000 McGraw-Hill AustraliaDisclosure requirements (before contract signed)Precontractual statementClearly understandableConforms to requirements set out in regulation attached to codeInformation statementForm 2 - Legal rights and obligations in plain English Written contractSigned by debtor and credit providerInformation as set out in S15 of CodeCopy of contract (within 14 days)Form 3 - “Before you sign things you must know”(Penalty for non-compliance: $500 000 plus compensation for any loss suffered by debtor or guarantor) 7Copyright © 2000 McGraw-Hill AustraliaGuaranteeNOT ENFORCEABLE unlessin writingsigned by guarantorcontains warning to guarantorguarantor advised to seek legal advicewarned of consequences should debtor fail to pay.8Copyright © 2000 McGraw-Hill AustraliaDisclosure requirements (after contract signed)Regular statement of accountsContinuing credit card contracts - at least every 40 daysContinuing credit contracts - between 40 days to three monthsOther credit contracts - at least every six monthsChanges to the contractCredit provider has unilateral rights - notified in writingCredit provider and debtor mutually agree - notified in writingContract unjust or causes hardship - may appeal to Credit Tribunal/Court9Copyright © 2000 McGraw-Hill AustraliaAction against defaulting debtorCredit provider makes Default NoticeDebtor, guarantor, mortgager30 days to remedy Pay Not pay Mortgage Debt > $125 000 Debt < $125 000reinstated Renegotiate Repossession Mortgage reinstated10Copyright © 2000 McGraw-Hill AustraliaAdvertisingRegulated by the Code:Cost must include: the annual percentage rate  or rates a statement detailing any  fees or charges that may apply.11Copyright © 2000 McGraw-Hill AustraliaLinked creditLinked credit provider: Credit provider has a commercial relationship with a supplier of goods and services, to refer the credit provider to the prospective purchasers.Credit provider and supplier jointly liable to debtor for loss or damage, e.g. from: - breach of contract - misrepresentation - failure to disclose relevant material under the terms  of the contract 12Copyright © 2000 McGraw-Hill AustraliaConsumer affairs and fair trading agencies Major functions: Receive complaintsTake action on behalf of consumersInvestigate matters on behalf of governmentAdvise governmentAlso:Carry out researchProvide information to the communityRaise community awareness of Code’s operationProvide legal representations to consumer 13Copyright © 2000 McGraw-Hill AustraliaPenalties for breaching the CodeCivil penalties for breach of key requirements:Up to $500 000 for each separate breach, plus compensation for any loss suffered by debtor or guarantor.Order applied for by - Debtor - Guarantor - Credit provider - Government Consumer Agency14Copyright © 2000 McGraw-Hill AustraliaPenalties for breaching the CodeCriminal penalties for breach of key requirements: Up to $10 000 for each separate breach.Application by Government Consumer Agency, Tribunal or Court.15Copyright © 2000 McGraw-Hill Australia