ob体育

media release (21-341MR)

ob体育 seeks feedback on proposed intervention orders for short term credit and continuing credit contracts

Published

ob体育 has released a consultation paper, Product Intervention Orders: Short Term Credit and Continuing Credit Contracts, on its proposed use of its product intervention powers to address significant consumer detriment in the short term credit and continuing credit contracts industries.聽

Today鈥檚 release follows:

  • ob体育鈥檚 first short term credit product intervention order made on 12 September 2019: 19-250MR. This order expired on 13 March 2021.
  • ob体育鈥檚 earlier consultation on a proposed continuing credit contract product intervention order through聽Consultation Paper 330聽Using the product intervention power: Continuing credit contracts聽(CP 330) published on 9 July 2020 and the Addendum to CP 330 published on 10 November 2020.

This consultation continues ob体育鈥檚 work to address high cost predatory lending impacting vulnerable consumers.

CP 355 outlines ob体育鈥檚 proposal to make product intervention orders which prohibit these products from being provided in circumstances which involve unreasonably high costs, in excess of the cost caps in the relevant exemptions in s6(1) and s6(5) of the National Credit Code.

The consultation process

ob体育 invites stakeholder feedback聽on two proposals:

  • Proposal D1 鈥� Make the short term credit product intervention order
  • Proposal D2 鈥� Make the continuing credit product intervention order

When providing feedback, please specify which Proposal you are providing feedback for. This will help ob体育 consider whether, and if so how, to exercise the product intervention power for each Proposal.

Following this consultation, if ob体育 is minded to make the short term credit product intervention order, ob体育 will first seek the Minister鈥檚 written approval.

All intervention orders subsequently made must be published on ob体育鈥檚 website, and a public notice will be issued in relation to the intervention.

Any feedback should be sent by 21 January 2022 迟辞:听[email protected].

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Background

This consultation follows previous ob体育鈥檚 consultations and action in relation to short term credit and continuing credit contracts

In July 2019 ob体育 released Consultation Paper 316 on the first proposed use of its product intervention powers in relation to significant detriment identified in the short term credit market: 19-177MR. On 12 September 2019 ob体育 made a product intervention order by way of a legislative instrument in relation to short term credit:聽19-250MR. The order came into force on 14 September 2019.

A judicial review application was filed on 20 September 2019 in the Federal Court of Australia by Cigno Pty Ltd (Cigno) which sought to quash the short term credit order:聽19-264MR. In April 2020 the Federal Court dismissed that application with costs awarded to ob体育:聽20-089MR. In May 2020 an appeal was filed by Cigno. On 29 June 2021 the Full Federal Court dismissed the appeal and awarded ob体育 costs.

In July 2020, ob体育 also released聽Consultation Paper 330聽(CP 330) on the proposed use of its product intervention power to address significant detriment identified in the continuing credit industry (20-159MR). In November 2020, ob体育 sought further feedback through Addendum to CP 330, after changes were made to the proposed draft order to provide certain exclusions for buy now pay later arrangements and certain fees charged by licenced providers of non-cash payment facilities (20-274MR).

The short term credit product intervention order lapsed in March 2021. ob体育 did not seek to extend it or to continue with ob体育鈥檚 proposed use of its product intervention powers in relation to the continuing credit industry because of an ambiguity in the product intervention provisions in the聽Corporations Act 2001.

On 24 June 2021, the Treasury Laws Amendment (2021 Measures No.4) Act 2021 was passed, removing the ambiguity and ensuring ob体育鈥檚 ability to use its product intervention powers to intervene in relation to the costs of a financial and credit product.

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