Uniform Consumer Credit Code

Uniform Consumer Credit Code

The Consumer Credit Code governs all credit transactions taking place in Australia. You have the same standard coverage wherever you live and however you use credit.

The Code not only introduces standardisation, it also presents credit information in a clear and easy to understand format. Credit providers such as banks, building societies, credit unions, finance companies and businesses, must tell you what your rights and obligations are in any credit arrangement. They are required by law to truthfully disclose all relevant information about your arrangement in a written contract, including interest rates, fees, commissions and other information which in the past was often hidden.

While the aim is to prevent many of the credit problems faced by consumers, the Code recognises that it is still important to protect consumers if they get into trouble. If you lose your job or are sick, you can ask to have your contract changed so that you can better meet your repayments. Credit providers are required to be careful not to make contracts with consumers who would find it difficult to meet their repayments. A court can also order changes to a contract if it is considered unjust.

Examples of credit the code does cover:

• Personal Loans
• Credit Cards
• Overdrafts
• Housing Loans
• Pay Day Loans
• Mortgages
• Hire of Goods
• Continuing Credit Accounts
• Guarantees

Specific parts of the Code apply to different types of credit and hiring contracts, but they are all covered by the Code’s principles of truth in lending and fairness in the marketplace.

Examples of credit the code does NOT cover:

• Credit that is for a period of 62 days or less, except where the fees and charges exceed 5% of the amount of loan or where the interest rate is greater than 24%p.a
• Credit provided without any prior agreement (eg. when a cheque account becomes overdrawn but there is no agreed overdraft facility)
• Continuing credit where no interest is paid but where account charges do not exceed $200 in the first year or $125 in any subsequent year
• The debit part of a joint debit and credit facility
• Bills of exchange or promissory notes
• Insurance premiums paid by instalments in certain circumstances
• Consumer leases for a fixed period of four months or less or which are for an indefinite period
• Consumer leases of goods as part of an employee’s employment package or benefits
• Credit for investments
• Credit for business purposes
• Pawnbrokers and trustees of estates except in the case of unjust transactions
• Employee loans (but you should check this as some of the provisions do apply)

What should I get before signing a Credit Contract?

Protecting your interest

How can you be sure that you are getting a good deal? The Consumer Credit Code ensures that you get the information you need to compare different credit schemes and make an informed choice.

It does this by making credit providers give the following information in all credit contracts:

• the amount of credit that is to be provided
• the annual percentage rate or rates
• how the interest is calculated and when it is charged
• the total amount of interest if the contract is to be paid out within seven years
• the credit fees and charges to be paid
• how you are to be informed about changes to the contract
• any default rate of interest and how this is calculated (eg. from a published reference rate)
• the frequency of account statements
• details of relevant commission charges
• information about whether a mortgage or guarantee applies
• details of credit related insurance financed under the contract

This information must be presented in the Precontractual Statement which gives details about fees and charges and the Information Statement which outlines your rights and obligations. You may find that these two statements are combined with the credit contract or are issued separately. You should take the time to read both of these statements before you sign the contract.

A good summary regarding vendor finance – Click Here

Further information can be found by visiting – The Consumer Credit Code Website

Robert Bou-Hamdan
Mortgage Adviser

0414 347 771
[email protected]
http://www.mortgagepackaging.com.au

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Comments made are of a general nature and should not be construed as individual advice.
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