National Consumer Credit Protection Reform - February 2010

In Part 2 of our series of articles on the National Consumer Credit Protection reforms, we deal with carried over instruments and any requirements for registration and licensing relating to those instruments required by the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Transitional Act)  and the National Consumer Credit Protection Act 2009 (National Credit Act), applicable to businesses and persons engaging in credit activities covered by the National Credit Act. 

Carried over instruments

A 'carried over instrument’ is a contract or other instrument that was made and in force, and to which an existing State or Territory consumer credit legislation applied, immediately before 1 July 2010.

Registration and licensing

• If, after 1 July 2010, you only engage in credit activities (other than providing credit services) in relation to carried over instruments you are generally not required to be registered or hold an Australian Credit Licence (ACL).
  
  
• However, if you do engage in credit activities in relation to carried over instruments you may be registered or granted an ACL.
  
  
• If registration or an ACL is granted on the basis that you are engaging in credit activities (other than providing credit services) that relate only to carried over instruments, a condition will be imposed on the registration and licence that you are authorised (registered or licensed) only to engage in those particular credit activities. This means you will not be able to engage in any other credit activities until the condition is varied or removed.
  
  
• If you engage in credit activities (other than providing credit services) in relation to a carried over instrument and have a current registration for those activities at 30 June 2010, you will, on application (and if you qualify for an ACL), be granted an ACL with respect to those specific activities.
  
  
• If you intend to engage in credit activities after 1 July 2010 and those credit activities:

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    • are not solely related to carried over instruments; or
    • if they do relate to carried over instruments, those activities involve the provision of credit services,

you will need to apply for and be granted an ACL (subject to you qualifying for an ACL) to engage in those credit activities after 1 July 2010, or be covered by someone else’s.

Credit activities

A ‘credit activity’ is defined in the National Credit Act and includes activity relating to credit contracts, consumer leases, related mortgages and guarantees, and credit services.

The provision of a ‘credit service’ is defined in the National Credit Act and includes providing credit assistance or acting as an intermediary.

What to do next?

Whether or not you should apply for registration and an ACL in relation to carried over instruments will depend on the nature of the credit activities you engage in. 

It is important to make that determination early because failure to make any required applications within the prescribed times, may result in an unwanted disruption to the smooth continuation of your business.

In all instances, we recommend you seek appropriate legal advice to cater for your specific circumstances.


For further information please contact Kylie O’Keeffe, Partner, on (08) 9288 6852 or email her at kylie.okeeffe@lavanlegal.com.au.