CCFA 2003 - learning legislation

Question 1

CCCFA 2003 - Purpose

Answer 1

• to protect the interests of consumers
• to promote confident and informed participation
• to promote/facilitate fair, efficient, and transparent markets for credit
• to provide remedies for debtors/lessees/occupiers for oppressive credit contracts/consumer leases/buy-back transactions of land; oppressive conduct.

Question 2

Advance is

Answer 2

• money provided to the debtor or to another person to the order of the debtor or a pre-existing monetary obligation of the debtor, that is paid/discharged/consolidated by the creditor

Question 3

Buy-back default fees are

Answer 3

fees /charges payable on a buy-back transaction

Question 4

Cash price, in relation to property sold or leased, or to services provided is

Answer 4

• the lowest price at which a person could have purchased that property or those services from the vendor/lessor/provider on the bases of payment in full at the time the contract was made.
• if there is no price in accordance with paragraph (a), the fair market value of that property or those services at the time the contract was made.

Question 5

Costs of borrowing, in relation to the consumer credit contract, are the following

Answer 5

• a credit fee
• a default fee
• interest charges

Question 6

Costs of the buy-back transaction

Answer 6

• the rent payable under the right to occupy
• the fees and charges that are payable under the transaction

Question 7

Costs of the lease

Answer 7

• payments to be made by the lessee under the lease
• fees/charges payable on a beach of the lease by the lessee or on the enforcement of the lease by the lessor

Question 8

Creditor is

Answer 8

a person who provides, or may provide, credit under a credit contract

Question 9

Debtor is

Answer 9

a person to whom credit has been provided, or may be provided, under a credit contract;

Question 10

Mobile trader is

Answer 10

a person who carries on a business of offering/agreeing to supply, in person and outside of fixed premises, consumer goods to a natural person:
- under a credit sale
- where all or a part of the supply of the consumer goods is to be finances by a consumer credit contract under which a creditor is an associated person of that person

Question 11

Revolving Credit Contract

Answer 11

a credit contract anticipates multiple advances, upon request by the debtor
AND
does not limit the total amount to be advanced to the debtor

Question 12

Credit contract

Answer 12

is a contract under which credit is/may be provided.

Question 13

Section 9C (2), Lender Responsibility principles

Answer 13

Every lender at all times MUST

exercise the care, diligence and skill of responsible lender
- in any advertisement
- before entering into an agreement
- in all subsequent dealing with a borrower

comply with all the lender responsibilities.

Question 14

Section 9(C)(3)(a)

Answer 14

A lender MUST, in relation to an agreement with a borrower

a) make reasonable enquiries, before entering into the agreement…to be satisfied that it is likely that -
(i) the credit/finance meets the borrower/s requirements and objectives
(ii) the borrower will make the payments under the agreement without suffering substantial hardship.

Question 15

Section 9(C)(3)(b)

Answer 15

b) assist the borrower with to reach an informed decision…to whether or not to enter into the agreement…being reasonable aware of full implications including…
(i) any advertising :
(A) comply with the advertising standards
(B) not (or likely not) misleading, deceptive, or confusing.
(ii) the terms…are expressed in plain language ; and
(iii) any information provided…is not…misleading, deceptive, or confusing; AND
(iv) reasonable steps are taken to offer… information about the agreement in
another language (language A)

Question 16

Section 9(C)(3)(c)

Answer 16

(c) assist the borrower to reach informed decisions in all subsequent dealings in relation to the agreement, including by ensuring that—
(i) any variation to the agreement is expressed in plain language… and
(ii) any information provided…after the agreement has been entered into is
not… misleading, deceptive, or confusing; and

Question 17

Section 9(C)(3)(d)

Answer 17

(d) treat the borrower and their property reasonably and in an ethical manner, including—
(i) when breaches of the agreement have occurred or may occur or when other
problems arise:
(ii) when a debtor under a consumer credit contract suffers unforeseen
hardship (see section 55):
(iii) during a repossession process…; and

Question 18

Section 9(C)(3)(e)

Answer 18

(e) ensure, in the case of an agreement to which Part 5 applies, that—
(i) the agreement is not oppressive:
(ii) the lender does not exercise a right or power conferred by the agreement in an oppressive manner:
(iii) the lender does not induce the borrower to enter into the agreement by oppressive means; and

Question 19

Section 9(C)(3)(f)

Answer 19

(f) meet all the lender’s legal obligations to the borrower, including under this Act, the Fair Trading Act 1986, the Consumer Guarantees Act 1993, the Financial Service Providers (Registration and Dispute Resolution) Act 2008, and [[ subpart 5A of Part 6 of the Financial Markets Conduct Act 2013]], which include—
(i) obligations in relation to disclosure, credit fees, unforeseen hardship applications, and credit repossession under this Act; and
(ii) prohibitions on false or misleading representations and unfair contract terms under the Fair Trading Act 1986; and
(iii) the guarantee that the service of providing credit and any other services will be carried out with reasonable care and skill under the Consumer Guarantees Act 1993.

Question 20

Section 9(C)(4)

Answer 20

The lender responsibilities are also that a lender must, in relation to a relevant guarantee that is taken by the lender,—

(a) make reasonable inquiries, before the guarantee is given, so as to be satisfied that it is likely that the guarantor will be able to comply with the guarantee without suffering substantial hardship; and

(b) assist the guarantor to reach an informed decision as to whether or not to give the guarantee and to be reasonably aware of the full implications of giving the guarantee, including by ensuring that—

(i) the terms of the guarantee are expressed in plain language in a clear, concise, and intelligible manner; and
(ii) any information provided by the lender to the guarantor is not presented in a manner that is or is likely to be misleading, deceptive, or confusing; and

(iii) reasonable steps are taken to offer to the guarantor information about the guarantee in another language (language A) if—
(A) advertising about the agreement that is wholly or significantly in language A is
being, or within the preceding 6 months has been, distributed to the public or a
section of the public; and
(B) the steps are necessary to ensure that the guarantor can reach an informed
decision (for example, if the guarantor may not have a good understanding of the
language in which the lender is otherwise providing information to the guarantor
under this Act); and]]

(c) treat the guarantor reasonably and in an ethical manner, including when breaches of
a credit contract to which the guarantee applies have occurred or may occur or when
other problems arise; and
(d) ensure, in the case of a guarantee that is to be treated as forming part of a credit
contract for the purposes of Part 5 under section 119, that—

(i) the guarantee is not oppressive:
(ii) the lender does not exercise a right or power conferred by the guarantee in an oppressive manner:
(iii) the lender does not induce the guarantor to give the guarantee by oppressive means; and
(e) meet all the lender’s legal obligations to the guarantor, including under the Acts specified in subsection (3)(f).