Consumer Credit Legal Service (WA) Inc

Transcription

1 Consumer Credit Legal Service (WA) Inc Faith Cheok (Principal Solicitor) Gemma Mitchell (Solicitor) Alicia Chan (Solicitor) Curtis Ward (Solicitor) 28 October 2014 This presentation is for information only. You must seek legal advice in relation to any particular circumstances.

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3 Overview 1) Small amount credit contracts Faith Cheok 2) Credit repair agencies Gemma Mitchell 3) Related sale contracts Alicia Chan 4) Credit Reporting Curtis Ward

4 Small amount credit contracts (SACCs) Faith Cheok (Principal Solicitor)

5 SACCs - features Amount: less than $2,000 Term: 16 days to 1 year Credit Provider: not an ADI Unsecured

6 Recent Legal Changes From 1 March 2013: Payday Loans (term 15 days or less) prohibited

7 Responsible lending New specific RL presumptions and obligations. Must get consumer s bank statements for previous 90 days. SACC presumed unsuitable if borrower: is already in default on another SACC; or has had 2 or more SACCs in the last 3 months.

8 Warning about borrowing Poster at premises Website link on home page Read over telephone

9 Prohibited SACCs Prescribed class of consumers who receive at least 50% of their gross income as payments under the Social Security Act 1991 (i.e. Centrelink payments); AND Loan repayments would exceed 20% of the consumer s gross income in an income cycle.

10 Centrelink payments 50% gross income from payments under the Social Security Act 1991 Which benefits = income? What benefits not income?

11 Which benefits income? Centrelink payments included in the Social Security Act 1991: One-off payments Pension bonus Bereavement payments Pensions & Allowances Age Disability support Widow/Widower Carer Parental Disaster recovery ABSTUDY & AUSTUDY Newstart

12 What benefits income? Centrelink payments not included in the Social Security Act 1991: Family tax benefits A & B School Kids bonuses Baby bonuses Parental leave

13 SACCs fee limitations One-off establishment fee of 20% Monthly account keeping fee of 4% A government fee or charge Default fees and charges Maximum total repayable is 200% of the original amount Enforcement expenses

14 Alternatives to SACCs Centrelink advance payment NILS or StepUP loan For essential goods or services Negotiate with lender Hardship variations

15 Credit Repair Agencies (CRAs) Gemma Mitchell (Solicitor)

16 What are Credit Repair Agencies? Credit repair, credit fix and debt solution companies. Often advertise that they can repair/fix/clean credit files. Largely unregulated.

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18 What do CRA s do? Represent that they can remove default listings from credit files in order to obtain credit. Tend to charge per listing (eg. $ $2000 per listing) Threaten to list non-payment of services as a further default listing BUT they cannot do anything that a consumer cannot do themselves!

19 How can default listings be VEDA removed? Credit provider s IDR EDR FOS / COSL If a listing has been correctly listed, there is no obligation on the credit provider to remove it, even if the debt has been paid.

20 CCLSWA s work on CRA s Telephone advice Case files Law reform reports of misconduct to ASIC or ACCC Submissions to COSL re Guidelines

21 Industry s position Credit providers want regulation of CRA s Amendments to EDR schemes terms of reference From 1 January 2015 FOS will have a discretion not to accept or continue with a dispute where a remunerated agent is engaging in inappropriate conduct COSL Guideline introduced which enables COSL to cease dealing with a third party representative who obtains a financial benefit for performing free services.

22 Related Sale Contracts Alicia Chan (Solicitor)

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24 What are Related Sale Contracts? Sale contract for sale of goods or supply of services Finance contract with a linked credit provider Related sale contract Example:

25 The Link Must be a link between the supplier of the goods / services and the lender Supplier Lender

26 How do you know if there is a link? The credit provider and supplier have a contract, arrangement or understanding Supplier regularly refers its customers to the credit provider for credit Credit application forms are made available by the supplier and may be signed at the supplier s premises

27 Example 1

28 Example 2 Personal Loan $10,000

29 If something goes wrong? Termination of sale contract entitles the debtor to terminate the tied credit contract refund of amounts paid & interest Give notice in writing

30 Right to damages Misrepresentation, breach of contract, failure of consideration, warranty or statement Supplier and linked credit provider are jointly liable

31 Credit Report Prepared For: CHANGES TO CREDIT REPORTING LAWS Curtis Ward (Solicitor) Report Date: 28 October 2014

32 WHY CHANGE THINGS? Negative v Comprehensive systems Adding positive information Bring Australia in line with the rest of the credit reporting world

33 JOSEPH JOHN BLOGGS REFERENCE: JJB 1123 SUMMARY OF INFORMATION CONTAINED WITHIN THIS REPORT CONSUMER CREDIT INFORMATION - Current Credit Providers - Default listings - Repayment history information COMMERCIAL CREDIT INFORMATION - Default listings - Directorships

34 JOSEPH JOHN BLOGGS REFERENCE: JJB 1123 CURRENT CREDIT PROVIDERS Name of Provider Account Type Big Bank Ltd Personal Loan Account Number Account Open Date 28/05/2014 Loan Payment Method Term of Loan Secured or unsecured Closed Date Monthly 5 years Secured Balance Limit $50, Privacy Fact Sheet No. 28: What information can be included in your credit report

35 DEFAULT LISTINGS $150 or more must be owing TWO notices must be sent 1. After default - Demanding payment days after first notice Intention to list default A default can be listed Between 14 and 90 days after second notice; and 60 days after default. Privacy Fact Sheet No. 35: When can a default be included in your credit report

36 JOSEPH JOHN BLOGGS REFERENCE: JJB 1123 REPAYMENT HISTORY INFORMATION Updated once each month Current up to an including the grace period Number Days late 0 On time or during the grace period 1 14 to 29 days after due date 2 30 to 59 days after due date 3 60 to 89 days after due date 4 90 to 119 days after due date to 149 days after due date to 179 days after due date days of more after due date Privacy Fact Sheet No. 34: When can information about your repayment history be included in your credit report

37 DISPUTED LISTINGS 1. Credit Provider or CRB 2. EDR (FOS or COSL) 3. The OAIC Privacy Fact Sheet No. 33: How you can make a complaint if you believe your credit report has been mishandled

38 Questions?