#### EXPOSURE DRAFT (29/02/2024)

## Inserts for

# Treasury Laws Amendment Bill 2024:
 Buy now, pay later


**Commencement information**

**Column 1** **Column 2** **Column 3**

**Provisions** **Commencement** **Date/Details**

1. Schedule 1 A single day to be fixed by Proclamation.

However, if the provisions do not commence
within the period of 6 months beginning on
the day this Act receives the Royal Assent,
they commence on the day after the end of
that period.


-----

## Schedule 1—Low cost credit contracts

### Part 1—Extending the application of the National
 Consumer Credit Protection Act 2009

 National Consumer Credit Protection Act 2009

**1 Subsection 5(1)**

Insert:


7 **_buy now pay later arrangement has the same meaning as in_**

8 section 13D of the National Credit Code.

9 **_buy now pay later contract has the same meaning as in section_**

10 13D of the National Credit Code.


11 **_low cost credit contract has the same meaning as in section 13C of_**

12 the National Credit Code.

13 **2 Subsection 5(1) (paragraph (a) of the definition of**

14 **_short-term credit contract)_**

15 After “continuing credit contract”, insert “or a low cost credit contract”.

16 **3 Subsection 5(1) (paragraph (a) of the definition of small**

17 **_amount credit contract)_**

18 After “continuing credit contract”, insert “or a low cost credit contract”.

19 **4 Subsection 160G(2) (note)**

20 Omit “sections 5 and 6”, substitute “sections 5, 6 and 13B”.

21 **5 After Part 1 of the National Credit Code**

22 Insert:

23 **Part 1A—Low cost credit contracts**

24

25 **13B Application of this Code to low cost credit contracts**


26 _[A provision will be included here that extends the application of_

27 _the National Credit Code to the provision of credit under low cost_


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1 _credit contracts and sets out the constitutional basis for the_

2 _extension.]_

3 **13C Meaning of low cost credit contract**

4 (1) A contract is a low cost credit contract if:

5 (a) credit is, or may be, provided under the contract; and

6 (b) the contract is:

7 (i) a buy now pay later contract; or

8 (ii) a contract prescribed by the regulations for the purposes

9 of this subparagraph; and

10 (c) the period during which credit is, or may be, provided under

11 the contract is no longer than the period (if any) prescribed

12 by the regulations for the purposes of this paragraph; and

13 (d) the contract satisfies any requirements prescribed by the

14 regulations for the purposes of this paragraph that relate to

15 fees or charges that are, or may be, payable under the

16 contract; and

17 (e) the contract satisfies any other requirements prescribed by

18 the regulations for the purposes of this paragraph.

19 _Fees and charges_


20 (2) To avoid doubt, regulations made for the purposes of

21 paragraph (1)(d) may prescribe that a specified fee or charge (or a

22 fee or charge of a specified kind) must (or must not) be payable

23 under the contract.

24 (3) For the purposes of this section, fees or charges:

25 (a) include a charge referred to in paragraph (a) of the definition

26 of credit fees and charges in subsection 204(1); and

27 (b) do not include a fee, charge, duty or expense referred to in

28 paragraph (b), (c) or (d) of that definition.


29 **13D Meaning of buy now pay later arrangement and buy now pay**

30 **_later contract_**

31 _Buy now pay later arrangement_


32 (1) A buy **_now pay later arrangement is an arrangement, or a series of_**

33 arrangements:

34 (a) under which a person (the merchant) supplies goods or

35 services to another person (the retail client); and


-----

1 (b) under which a third person (the BNPL provider) directly or

2 indirectly pays the merchant an amount that is some or all of

3 the price for the supply mentioned in paragraph (a); and

4 (c) that includes a contract between the BNPL provider and the

5 retail client under which the BNPL provider provides credit

6 to the retail client in connection with the supply mentioned in

7 paragraph (a).

8 (2) However, an arrangement or a series of arrangements of the kind

9 described in subsection (1) is not a buy now pay later arrangement

10 if the principal business of the merchant is the supply of

11 administration, brokerage, management, collection or recovery

12 services, or other incidental services, in connection with the

13 provision of credit under credit contracts.

14 (3) For the purposes of subsection (1), and to avoid doubt:

15 (a) it does not matter whether any fees or charges are payable by

16 the retail client or the merchant in connection with the

17 arrangement or series of arrangements; and

18 (b) it does not matter whether the payment by the BNPL

19 provider mentioned in paragraph (1)(b) occurs before, at or

20 after the time when the goods or services are supplied by the

21 merchant to the retail client as mentioned in paragraph (1)(a);

22 and

23 (c) it does not matter whether the contract mentioned in

24 paragraph (1)(c) is a continuing credit contract; and

25 (d) it is not necessary for the arrangement or series of

26 arrangements to include any contract to which the merchant,

27 retail client and BNPL provider are all parties.


28 _Buy now pay later contract_

29 (4) A contract is a buy now pay later contract if:

30 (a) it is part of a buy now pay later arrangement involving a

31 retail client, a BNPL provider and a merchant; and

32 (b) it is a contract, between the retail client and the BNPL

33 provider, of the kind mentioned in paragraph (1)(c).


34 **6 Subsection 204(1) of the National Credit Code**

35 Insert:

36 **_buy now pay later arrangement: see section 13D._**

37 **_buy now pay later contract: see section 13D._**


-----

**_low cost credit contract: see section 13C._**

**7 Subsection 204(1) of the National Credit Code (after**

**paragraph (d) of the definition of medium amount credit**

**_contract)_**


Insert:

(da) the contract is not a low cost credit contract; and


-----

1 **Part 2—Responsible lending conduct**

2 **_National Consumer Credit Protection Act 2009_**

3 **8 Before section 115**

4 Insert:

5 **115A Scope of this Division**

6 This Division does not apply in relation to a credit contract that is a

7 low cost credit contract.

8 **9 Section 128**

9 After “the regulations”, insert “for the purposes of this section”.

10 **10 At the end of section 128 (before the penalty)**

11 Add:


12 Note: Part 3-2BA affects how this section, and other provisions in this Part,

13 apply in relation to certain low cost credit contracts.

14 **11 Paragraph 133(4)(b)**

15 Omit “at the time of the contract is entered or the credit limit is

16 increased, the information”, substitute “at the time the contract is

17 entered or the credit limit is increased”.


18 **12 After Part 3-2B**

19 Insert:


-----

## Part 3-2BA—Licensees that are credit providers
 under credit contracts: additional rules
 relating to low cost credit contracts

### Division 1—Introduction

**133BX Guide to this Part**


6 This Part has rules that apply to certain licensees who are, or are to

7 be, credit providers under certain low cost credit contracts. It

8 applies in addition to the general rules in Part 3-2, and modifies

9 some of those rules.

10 Division 1 provides that a licensee may elect that this Part apply to

11 the licensee in relation to some or all low cost credit contracts. This

12 Part only applies to a licensee who has made an election, and only

13 applies to such a licensee in relation to low cost credit contracts

14 covered by the election.

15 Division 2 modifies how some of the general rules in Part 3-2

16 apply to a licensee who has made an election. These modifications

17 affect the obligations that the licensee has under Part 3-2:

18 (a) to assess whether a low cost credit contract will be

19 unsuitable for a consumer before doing particular things

20 in relation to the contract; and

21 (b) not to enter, or increase the credit limit of, a low cost

22 credit contract that is unsuitable for a consumer.


23 Division 3 requires a licensee who has made an election to have a

24 policy (called an unsuitability assessment policy) that sets out how

25 the licensee will comply with the licensee’s obligation under

26 Part 3-2 to assess whether a low cost credit contract will be

27 unsuitable for a consumer.

28 **133BXA Scope of this Part**

29 _This Part applies if licensee makes election_


30 (1) A licensee may, in writing, elect that this Part apply to the licensee

31 in relation to:


-----

1 (a) all low cost credit contracts; or

2 (b) each low cost credit contract in a specified class of low cost

3 credit contracts.

4 (2) This Part:

5 (a) applies to a licensee if the licensee has made an election

6 under subsection (1) and has not revoked the election; and

7 (b) applies to such a licensee in relation to a credit contract if the

8 credit contract is a low cost credit contract covered by the

9 election.

10 _Licensee must keep copy of election_


11 (3) A licensee who makes an election under subsection (1) must keep a

12 written copy of the election for the period:

13 (a) starting at the time when the licensee makes the election; and

14 (b) ending 6 years after the earlier of the following:

15 (i) the day when the licensee revokes the election;

16 (ii) the last day, during the period when the election is in

17 force, when the licensee does a thing mentioned in

18 paragraph 128(a) or (b) in relation to a low cost credit

19 contract that is covered by the election.

20 _Application of Part 3-2 not otherwise affected_


21 (4) Nothing in this Part affects how Part 3-2 applies to a licensee in

22 relation to a credit contract if the licensee has not made an election

23 under subsection (1) of this section that covers the contract.

24 **133BXB Definitions**

25 In this Part:


26 **_low cost credit conduct has the meaning given by subsection_**

27 133BXD(1).

28 **_unsuitability assessment policy has the meaning given by_**

29 subsection 133BXH(1).


-----

1 **Division 2—Unsuitable low cost credit contracts**

2 **133BXC When inquiries etc. must be made**

3 For the purposes of applying section 128 to a licensee in relation to

4 a low cost credit contract:

5 (a) paragraphs 128(aa) and (ba) are to be disregarded; and

6 (b) the period for making the assessment mentioned in

7 paragraph 128(c), and the inquiries and verification

8 mentioned in paragraph 128(d), is taken to be the period of

9 90 days (or other period prescribed by the regulations for the

10 purposes of this paragraph) ending immediately before the

11 licensee starts to do the thing mentioned in paragraph 128(a)

12 or (b) (whichever applies).


13 **133BXD When inquiries etc. are reasonable**

14 (1) This section applies to a licensee who engages in any of the

15 following conduct (low cost credit conduct):

16 (a) entering a low cost credit contract with a consumer who will

17 be the debtor under the contract, as mentioned in

18 paragraph 128(a);

19 (b) increasing the credit limit of a low cost credit contract with a

20 consumer who is the debtor under the contract, as mentioned

21 in paragraph 128(b).

22 Note: The licensee must also have elected under subsection 133BXA(1) that

23 this Part apply to the licensee in relation to the low cost credit

24 contract: see subsection 133BXA(2).

25 _Relevant matters_

26 (2) In determining whether the licensee has:

27 (a) made reasonable inquiries about the consumer’s requirements

28 and objectives in relation to the low cost credit contract, as

29 required under paragraph 130(1)(a); and

30 (b) made reasonable inquiries about the consumer’s financial

31 situation, as required under paragraph 130(1)(b); and

32 (c) taken reasonable steps to verify the consumer’s financial

33 situation, as required under paragraph 130(1)(c);

34 regard must be had to the matters covered by subsection (3) of this

35 section, and regard may be had to any other relevant matters.


36 (3) The matters covered by this subsection are the following:


-----

1 (a) the nature of the low cost credit contract (including the terms

2 of the contract and the type and amount of credit provided

3 under the contract);

4 (b) the nature of the target market for the low cost credit

5 contract, as described in the target market determination

6 (within the meaning of the Corporations Act 2001) for the

7 contract;

8 (c) whether the consumer belongs to a class of persons whose

9 members are likely to be financially vulnerable;

10 (d) whether the licensee has in place any policies that reduce the

11 risk of the licensee providing credit to a consumer on terms

12 that are not affordable for the consumer;

13 (e) whether the licensee has in place any policies that mitigate

14 the harm that may be caused to a consumer if the licensee

15 provides credit to the consumer on terms that are not

16 affordable for the consumer;

17 (f) any matters prescribed by the regulations.

18 Note: The particular things that a licensee must do in order to satisfy the

19 licensee’s obligations under paragraphs 130(1)(a) to (c) in relation to

20 low cost credit contracts may vary from case to case, and may be less

21 onerous in some cases than in others, depending on matters such as

22 those covered by this subsection.

23 (4) For the purposes of paragraphs (3)(d) and (e), if the licensee

24 engages in low cost credit conduct in contravention of section 133

25 (which contains prohibitions relating to unsuitable credit

26 contracts), then the licensee is taken to have provided credit to a

27 consumer on terms that are not affordable for the consumer.

28 Note: This subsection does not limit the circumstances in which the licensee

29 is taken to have provided credit to a consumer on terms that are not

30 affordable for the consumer.

31 _Inquiries or steps prescribed by regulations_


32 (5) Subsections (2) and (3) do not affect the application to the licensee

33 of regulations made for the purposes of subsection 130(2).

34 Note: Regulations made for the purposes of subsection 130(2) may prescribe

35 particular inquiries or steps that must be made or taken, or that do not

36 need to be made or taken, for the purposes of paragraph 130(1)(a), (b)

37 or (c).

_10_


-----

1 _Relying on information or documents provided by consumer etc._

2 (6) Subject to subsections (2) and (3), and subject to any regulations

3 made for the purposes of subsection 130(2), nothing in this Act has

4 the effect that the licensee cannot satisfy the requirements in

5 paragraphs 130(1)(a), (b) and (c), as they apply in relation to the

6 low cost credit contract and the consumer, if the licensee:

7 (a) relies on information or documents provided by the

8 consumer; or

9 (b) follows a general policy about the inquiries to be made, or

10 the steps to be taken, in certain kinds of cases; or

11 (c) relies on presumptions (for example, presumptions about the

12 consumer’s requirements or objectives in relation to the low

13 cost credit contract, or presumptions about the consumer’s

14 financial situation).


15 **133BXE Assessments etc. in relation to larger contracts**

16 (1) This section applies to a licensee who enters a low cost credit

17 contract (the initial contract) with a consumer (the relevant

18 **_consumer)_** who will be the debtor under the contract.


19 _Entering the initial contract_

20 (2) The licensee may satisfy paragraphs 128(c) and (d) in relation to

21 entering the initial contract by (respectively):

22 (a) making an assessment that would satisfy paragraph 128(c) in

23 relation to entering a larger contract with the relevant

24 consumer; and

25 (b) making inquiries and verification that would satisfy

26 paragraph 128(d) in relation to entering the larger contract

27 with the relevant consumer.


28 Note: For larger contract, see subsection (6).

29 _Subsequent credit increases_

30 (3) Subsection (4) applies if:

31 (a) the licensee satisfies paragraphs 128(c) and (d) in relation to

32 entering the initial contract by:

33 (i) making an assessment (the initial assessment) that

34 would satisfy paragraph 128(c) in relation to entering,

35 with the relevant consumer, a larger contract with a

36 particular credit limit (the maximum credit limit); and

_11_


-----

1 (ii) making inquiries and verification (the initial inquiries

2 **_and verification)_** that would satisfy paragraph 128(d) in

3 relation to entering the larger contract with the relevant

4 consumer; and

5 (b) the initial assessment is an assessment that the larger contract

6 will not be unsuitable for the relevant consumer if the larger

7 contract is entered in the period covered by the initial

8 assessment.

9 (4) If the licensee subsequently, within the protected period, makes a

10 protected increase to the credit limit of the initial contract, then:

11 (a) the licensee is taken to satisfy section 128 in relation to the

12 protected increase (regardless of whether the initial

13 assessment, and the initial inquiries and verification, were

14 made within the period that applies in relation to the

15 protected increase under that section); and

16 (b) the initial assessment is taken to be:

17 (i) an assessment that covers the protected period; and

18 (ii) an assessment that the initial contract will not be

19 unsuitable for the relevant consumer if the protected

20 increase is made in the protected period.


21 Note 1: For protected increase and protected period, see subsection (6).

22 Note 2: Even if the licensee is taken under this subsection to satisfy

23 section 128 in relation to the protected increase, it is still possible for

24 the licensee to contravene subsection 131(1) or 133(1) in relation to

25 the protected increase.


26 (5) Despite subsections (3) and (4):

27 (a) the licensee may, at any time after making the initial

28 assessment and before making the protected increase, make a

29 new assessment in relation to the protected increase for the

30 purposes of paragraph 128(c); and

31 (b) if the licensee does so, then subsection (4) of this section

32 does not apply to the licensee in relation to the protected

33 increase.

34 (6) In this section:

35 **_larger contract means a low cost credit contract that:_**

36 (a) has a credit limit that is greater than the credit limit of the

37 initial contract when the initial contract is entered; and

_12_


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1 (b) has terms that are otherwise substantially the same as the

2 terms of the initial contract when the initial contract is

3 entered.

4 **_protected increase: an increase to the credit limit of the initial_**

5 contract is a protected increase if:

6 (a) after the increase, the initial contract has a credit limit that is

7 no greater than the maximum credit limit (within the

8 meaning of subparagraph (3)(a)(i)); and

9 (b) the terms of the initial contract after the increase are

10 otherwise substantially the same as the terms of the initial

11 contract immediately before the increase.


12 **_protected period means whichever of the following is shorter_**

13 (disregarding paragraph (4)(b)):

14 (a) the period covered by the initial assessment;

15 (b) the period of 2 years beginning when the period covered by

16 the initial assessment begins.

17 **133BXF Assessments of low cost credit contracts—presumptions**

18 **where credit limit of contract is less than $2,000**


19 (1) This section applies when determining, for the purposes of

20 subsection 131(1), whether a low cost credit contract will be

21 unsuitable for a consumer under paragraph 131(2)(b) if the contract

22 is entered, or the credit limit of the contract is increased, in the

23 period covered by the assessment mentioned in subsection 131(1).

24 Note: This section does not affect whether a low cost credit contract will be

25 unsuitable for a consumer under paragraph 131(2)(a) or (c).


26 _Entering a low cost credit contract_

27 (2) For the purpose of applying subsection 131(1) in relation to a

28 licensee entering a low cost credit contract (the initial contract)

29 with a consumer, if the credit limit of the initial contract, at the

30 time the initial contract is entered, will be less than $2,000, then it

31 is presumed (unless the contrary is proved) that the initial contract

32 will not be unsuitable for the consumer under paragraph 131(2)(b)

33 if the initial contract is entered in the period covered by the

34 assessment.

35 (3) However, subsection (2) does not apply if:

36 (a) the licensee satisfies paragraph 128(c) in relation to entering

37 the initial contract by making an assessment that would

_13_


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1 satisfy that paragraph in relation to entering a larger contract

2 with the consumer (see subsection 133BXE(2)); and

3 (b) the credit limit of the larger contract is $2,000 or greater.

4 _Increasing the credit limit of a low cost credit contract_

5 (4) For the purpose of applying subsection 131(1) in relation to an

6 increase (the relevant increase) made by a licensee to the credit

7 limit of a low cost credit contract (the initial contract) with a

8 consumer, if the credit limit of the initial contract after the increase

9 will be less than $2,000, then it is presumed (unless the contrary is

10 proved) that the initial contract will not be unsuitable for the

11 consumer under paragraph 131(2)(b) if the relevant increase occurs

12 during the period covered by the assessment.


13 (5) However, subsection (4) does not apply if:

14 (a) the licensee previously satisfied paragraph 128(c) in relation

15 to entering the initial contract by making an assessment (the

16 **_initial assessment) that would have satisfied that paragraph_**

17 in relation to entering a larger contract with the consumer

18 (see subsection 133BXE(2)); and

19 (b) the credit limit of the larger contract was $2,000 or greater;

20 and

21 (c) because of the initial assessment, the licensee is taken under

22 subsection 133BXE(4) to satisfy section 128 into relation to

23 the relevant increase.

24 _Definitions_

25 (6) In this section:


26 **_larger contract means a low cost credit contract that:_**

27 (a) has a credit limit that is greater than the credit limit of the

28 initial contract when the initial contract is entered; and

29 (b) has terms that are otherwise substantially the same as the

30 terms of the initial contract when the initial contract is

31 entered.

_14_


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**133BXG Prohibition on entering unsuitable low cost credit contracts**

**etc.—presumptions where credit limit of contract is less**

**than $2,000**

(1) This section applies when determining, for the purposes of

subsection 133(1), whether a low cost credit contract is unsuitable

for a consumer under paragraph 133(2)(b).


Note: This section does not affect whether a low cost credit contract is

unsuitable for a consumer under paragraph 133(2)(a) or (c).


9 _Entering a low cost credit contract_

10 (2) For the purpose of applying subsection 133(1) in relation to a

11 licensee entering a low cost credit contract with a consumer, if the

12 credit limit of the contract, at the time the contract is entered, is

13 less than $2,000, then it is presumed (unless the contrary is proved)

14 that the contract is not unsuitable for the consumer under

15 paragraph 133(2)(b).


16 _Increasing the credit limit of a low cost credit contract_

17 (3) For the purpose of applying subsection 133(1) in relation to an

18 increase made by a licensee to the credit limit of a low cost credit

19 contract with a consumer, if the credit limit of the contract after the

20 increase is less than $2,000, then it is presumed (unless the

21 contrary is proved) that the contract is not unsuitable for the

22 consumer under paragraph 133(2)(b).


23 **Division 3—Unsuitability assessment policies**

24 **133BXH Licensee must have an unsuitability assessment policy**

25 (1) A licensee must have a written policy (an unsuitability assessment

26 **_policy) that sets out how the licensee will comply with sections 128_**

27 and 131 (which deal with assessments of unsuitability), as those

28 sections apply in relation to low cost credit contracts.


29 _Unsuitability assessment policy must be effective_

30 (2) The licensee must ensure that the licensee’s unsuitability

31 assessment policy is one that will facilitate compliance by the

32 licensee with sections 128 and 131, as those sections apply in

33 relation to low cost credit contracts.


_15_


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_Regulations may prescribe further requirements_


(3) The licensee must comply with any requirements relating to

unsuitability assessment policies prescribed by the regulations for

the purposes of this subsection.

**13 Saving provision—regulations**


6 To avoid doubt, regulations prescribing a period for the purposes of

7 section 128 of the National Consumer Credit Protection Act 2009 that

8 were in force immediately before the commencement of this Part:

9 (a) continue in force on and after that commencement; and

10 (b) are taken, on and after that commencement, to be made for

11 the purposes of that section as amended by this Part.

_16_


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1 **Part 3—Credit representatives**

2 **_National Consumer Credit Protection Act 2009_**

3 **14 Subsection 64(5)**

4 Omit “This section”, substitute “This subsection”.

5 **15 Paragraph 64(5)(c)**

6 Repeal the paragraph, substitute:

7 (c) a person who is not a member of the AFCA scheme to

8 engage in a credit activity in relation to a contract that is not a

9 low cost credit contract; or

10 (ca) a person who is not a member of the AFCA scheme to

11 collect, on the licensee’s behalf, repayments made by a

12 debtor under a low cost credit contract; or

13 **16 Paragraph 65(6)(c)**

14 Repeal the paragraph, substitute:

15 (c) a natural person who is not a member of the AFCA scheme

16 to engage in a credit activity in relation to a contract that is

17 not a low cost credit contract; or

18 (ca) a natural person who is not a member of the AFCA scheme

19 to collect, on the licensee’s behalf, repayments made by a

20 debtor under a low cost credit contract; or


21 **17 After subsection 71(5)**

22 Insert:

23 _Exceptions—sub-authorisations relating to low cost credit_

24 _contracts_


25 (5A) Subsections (1) and (4) do not apply to an authorisation under

26 subsection 65(1) (which deals with sub-authorisations) that

27 authorises a person to engage in credit activities in relation to a low

28 cost credit contract.

29 **18 After subsection 158(1)**

30 Insert:


_17_


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1 _Exceptions—credit activity relating to low cost credit contracts_

2 (1A) Subsection (1) does not apply if the credit representative gives the

3 consumer the licensee’s credit guide:

4 (a) for the purpose of satisfying subsection 113(1) in connection

5 with the provision of credit assistance to the consumer in

6 relation a low cost credit contract; or

7 (b) for the purpose of satisfying subsection 126(1) in connection

8 with entry into a low cost credit contract with the consumer;

9 or

10 (c) for the purpose of satisfying subsection 127(1) in connection

11 with the assignment to the licensee of rights or obligations of

12 a credit provider under a low cost credit contract.


13 _Form and content of credit guide_

14 **19 Paragraph 160(3)(e)**

15 After “is a credit representative”, insert “and has been allocated a credit

16 representative number”.

_18_


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1 **Part 4—Interest rates and charges**

2 **_National Consumer Credit Protection Act 2009_**

3 **20 After subsection 17(6) of the National Credit Code**

4 Insert:

5 _Where no interest charge is payable under low cost credit contract_

6 (6A) In the case of a credit contract that is a low cost credit contract, if

7 no interest charges are payable under the contract then:

8 (a) subsections (4), (5) and (6) do not apply in relation to the

9 contract document; and

10 (b) the contract document must contain a statement to the effect

11 that no interest charges are payable under the contract.

12 **21 Paragraph 32A(4)(b) of the National Credit Code**

13 After “the credit contract is a”, insert “low cost credit contract,”.

14 **22 After subsection 34(6) of the National Credit Code**

15 Insert:

16 (6A) Subsection (6) applies in relation to a low cost credit contract only

17 if interest charges are payable under the contract.

_19_


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### Part 5—Default notices

 National Consumer Credit Protection Act 2009

**23 Subsection 39C(1) of the National Credit Code**

Omit “(1) If”, substitute “If”.

**24 Subsection 39C(2) of the National Credit Code**

Repeal the subsection.


7 **25 Subdivision C of Division 1 of Part 5 of the National Credit**

8 **_Code (heading)_**

9 Omit “first direct debit default”, substitute “first default in

10 **payment”.**

11 **26 Section 87 of the National Credit Code (heading)**


12 Omit “the first time a direct debit default occurs”, substitute “of first

13 **default in payment”.**

14 **27 Before subsection 87(1) of the National Credit Code**

15 Insert:

16 _Which defaults does this section apply to?_

17 **28 Paragraph 87(1)(a) of the National Credit Code**

18 After “credit contract”, insert “(other than a low cost credit contract)”.

19 **29 After subsection 87(1) of the National Credit Code**

20 Insert:

21 (1A) This section also applies if:

22 (a) a debtor under a low cost credit contract is in default in

23 relation to the payment of an amount under the contract; and

24 (b) it is the first occasion when the debtor is in default in relation

25 to such a payment.

26 _Offence_

27 **30 Before subsection 87(5) of the National Credit Code**

28 Insert:

_20_


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_Other notice requirements not affected_


_21_


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### Part 6—Comparison rates

 National Consumer Credit Protection Act 2009


3 **31 Section 158 of the National Credit Code (at the end of the**

4 **heading)**

5 Add “or low cost credit contracts”.

6 **32 At the end of subsection 158(1) of the National Credit**

7 **_Code_**

8 Add “or low cost credit contracts”.

9 **33 Subsection 158(2) of the National Credit Code**

10 Repeal the subsection, substitute:


11 (2) Accordingly, a reference in this Part to the provision of credit (or

12 to a credit contract or related matters) does not include a reference

13 to:

14 (a) the provision of credit under a continuing credit contract (or

15 to a continuing credit contract or matters related to such a

16 contract); or

17 (b) the provision of credit under a low cost credit contract (or to

18 a low cost credit contract or matters related to such a

19 contract).

_22_


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### Part 7—Avoidance schemes

 National Consumer Credit Protection Act 2009

**34 Section 323 (paragraph beginning “Division 1A”)**


4 After “small amount credit contracts”, insert “, low cost credit

5 contracts”.

6 **35 Paragraphs 323A(2)(a) to (c)**

7 After “small amount credit contract”, add “, a low cost credit contract”.

8 **36 Subparagraphs 323B(1)(a)(i) and (ii)**

9 After “small amount credit contract”, insert “or a low cost credit

10 contract”.

11 **37 Subparagraphs 323B(1)(b)(i) and (ii)**


12 After “small amount credit contracts”, insert “, low cost credit

13 contracts”.

14


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