BE PROTECTED - Your legal rights
National Credit Code
Your legal rights as a credit consumer are protected under the National Credit Code, which is a schedule to the National Consumer Credit Protection Act 2009 (Cth). The information here is a brief description of your rights under this Code.
The National Credit Code covers almost all the consumer credit transactions that take place across Australia including personal loans, credit cards, overdrafts, home loans, investment property home loans and pay day loans. It doesn’t cover all forms of credit though. Some types of short term credit, or credit used for other investments or business purposes may fall outside the Code.
Under the Code, credit providers must disclose your rights and obligations in a credit contract that is clear and easy to understand.
The Code also aims to prevent potential problems for consumers. For example, credit providers must be careful not to make contracts with consumers who would find it difficult to meet their repayments. And, if you do run into problems - like losing your job or falling ill, you can ask to have your credit contract changed to enable you to meet your repayments. A Court Order can also enforce changes to a credit contract if it’s considered unjust.
To make it easier to compare between different credit products, the Code requires that lenders provide clear information about costs of credit including interest rates, fees and any commissions.
If you believe you will have difficulty paying your account, you should contact your bank as soon as possible. If you owe less than $500,000, you should be entitled to access your lender’s financial hardship provisions, particularly if illness or unemployment are affecting your ability to make repayments.
Get in touch with your lender and explain your circumstances. Some of the options that may be discussed by your lender include suspension of repayments for a certain period, making interest only repayments for a fixed time or reducing your overall repayments.
If your lender won’t agree to a reasonable request for assistance, contact the Financial Ombudsman Service http://www.fos.org.au, which has the power to ask lenders to change the terms of your credit contract.
Advertising for credit products is also governed by the Code. When lenders advertise fixed term credit – like a home loan, the ‘comparison rate’ must be shown. This interest rate takes into account the cost of the lender’s ongoing fees and charges as well as the interest rate. It lets you make an accurate comparison between different loans.
Some costs, like government fees or charges, or one-off fees charged by the lender (for example, if you pay the loan out early) are not included in the comparison rate.
For more information on the National Credit Code visit www.asic.gov.au/credit.