While amendments to consumer credit legislation in Australia took effect last week, the Australian Treasury missed the deadline in issuing the regulations, thereby delaying some of the changes.
The 2012 Consumer Credit Legislation Amendment Act changes the hardship provisions contained in the National Consumer Protection Act and the rules governing reverse mortgages, interest-rate caps on small, short-term loans and salary deductions, Banking Day reports.
Under the new rules, a hardship application will be replaced by a hardship notice to be filed either orally or in writing by debtors who cannot meet their debt obligations under a credit contract. After a lender has received a hardship notice, it has 21 days to issue an information notice requesting more information from the borrower, and the borrower subsequently has 21 days to respond.
The lender will then have 21 days to issue a decision notice, which indicates whether the lender is willing to change the terms of the loan contract, to the borrower. Failure to issue a notice within the allotted 21 days can result in a penalty of up to $1.74 million. Borrowers are able to appeal a lender’s decision, according to Banking Day.
Last month the Australian Treasury announced that it would defer the inclusion of small business lending in the NCCPA and announced last week that no regulations would cover reverse mortgage rules, adding that it would also consider deferring the effective date of the rules until May 1.