Consumer credit - transfer of power to the Commonwealth

On 1 April 2010 the NSW Credit (Commonwealth Powers) Act 2010 transferred power to regulate credit and finance broking to the Commonwealth. The power to require credit providers and brokers to register with ASIC before 1 July 2010 took effect immediately. Industry members were required to register in order to continue or commence trading prior to obtaining a licence, that process started on 1 July 2010.

The Commonwealth legislation, the National Consumer Credit Protection Act 2009, incorporates the National Credit Code, which is an amended version of the state-based Consumer Credit Code. The National Credit Code commenced on 1 July 2010.

Chapter 3 of the National Credit Act will impose documentary requirements on credit providers and finance brokers that will support the new responsible lending requirements. While high level requirements commenced on 1 July 2010 and the documentary provisions commence on 1 January 2011.

The Schedules to the NSW Act set out the repeals, consequential amendments, and the savings and transitional provisions that apply in New South Wales. In particular, Schedule 3 retains the Financial Counselling Trust Fund that is used to fund financial counselling services. The provisions relevant to the maximum annual percentage rate permitted to be charged on credit contracts are retained until 30 June 2011, with amendments.