Legislative overview

As an Introducer doing business under a Broker or Referrer Agreement, there is a range of laws that affect your work. The following summarises the most significant of these but is not intended to be a substitute for obtaining your own legal advice.

Uniform Consumer Credit Code

The Uniform Consumer Credit Code (UCCC) regulates personal consumer lending.

It applies throughout Australia and affects both the establishment and operation of credit contracts.

The UCCC will apply to a loan if:

  • The borrower is an individual (or one or more individuals) and not a company, other than a strata corporation
  • Credit is provided or intended to be provided wholly or predominantly for a personal domestic or household purpose and not for an investment purpose ("predominantly" means more than half)
  • The lender will or may impose a charge for providing the credit
  • The credit is provided in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider
  • The loan is not of a type expressly excluded from coverage under the UCCC (for example, short term credit of less than 62 days, which satisfies other requirements as to maximum fees and interest charges)

It is important that if the credit is not provided wholly or predominantly forpersonal, domestic or household purposes that the customer signs a business purpose declaration. Otherwise the UCCC will be presumed to apply unless the credit provider proves otherwise.

The effect of the UCCC, in general terms is to require that:

  • Certain pre-contractual disclosures be made to borrowers before they enter into a credit contract or consumer lease (which includes details of the proposed credit contract and the borrower's rights under the UCCC)
  • Credit contracts contain disclosures relating to among other matters, fees, charges and interest
  • Mortgages and guarantees securing credit contracts conform to certain requirements
  • Credit providers supply ongoing information to the borrower throughout the loan regularly or on demand (for example as to the pay out amount, subject to payment of fees if permitted under the credit contract)
  • Credit providers comply with certain requirements and restrictions when enforcing the credit contract (including the giving of notices before enforcement takes place).
  • Credit providers and others engaged in selling credit do not engage in misleading conduct (for example as to the characteristics of a loan when dealing with a borrower or prospective borrower), harass borrowers or visit borrowers in their home without a prior arrangement (note the ASIC Act also affects misleading conduct - see below)
  • Credit providers and intermediaries (including brokers) engaged in selling credit (other than continuing credit contracts such as overdrafts and credit cards) must provide customers with the relevant comparison rate with an application for credit. Intermediaries must display the comparison rate schedules of all or at least six of the credit providers with whom the intermediary deals at their premises and on any website they may use to promote their services. Any advertisement containing an annual percentage rate must also include the comparison rate

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Trade Practices Act (TPA)/ASIC Act

Similar to the State and Territory fair trading laws, the Commonwealth's TPA and ASIC Act regulate (among other things) anti-competitive conduct and unfair practices (in particular misleading or deceptive conduct). These laws apply to corporations and individuals throughout Australia.

Significant penalties may apply for breaches of the TPA if the Australian Consumer and Competition Commission takes action. Individuals and corporations may also commence private action seeking various remedies for breaches of the TPA provisions relating to anti-competitive conduct or unfair practices.

Anti-competitive conduct
Contracts, arrangements or understandings with the purpose or effect of substantially lessening competition may be prohibited under the TPA. Examples of prohibited agreements may include price fixing agreements or agreements including "exclusionary provisions." It is also unlawful for a supplier to attempt directly or indirectly to engage in exclusive dealing, unless exceptional circumstances apply (including where conduct is authorised by ACCC).

Resale price maintenance, misuse of market power and mergers are other activities regulated under the anti-competitive provisions of the TPA.

Unfair practices
The TPA also contains provisions regulating unfair practices. However in most cases where credit is involved, the relevant legislative requirements affecting such unfair practices as unconscionable conduct, misleading or deceptive conduct, specific prohibited false representations (for example falsely representing that products or services have certain characteristics or as to the price of products - including interest rates and fees) are set out in the ASIC Act.

The ASIC Act is administered by the Australian Securities and Investments Commission, which generally has powers to enforce the ASIC Act (including taking court action or investigating breaches) in the same way as the ACCC may enforce the TPA.

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Finance Broker Legislation

There are a number of States and Territories which currently have laws regulating finance broking.

Depending on the State or Territory in which you are conducting business, you may need to hold a licence to conduct business as a finance broker. Other requirements of this legislation may also impact on how you do business. For example in NSW, finance brokers must enter into a Finance Broking Contract if they are engaged in finance broking of loans to which the Uniform Consumer Credit Code applies. That Finance Broking Contract must contain certain information.

The Federal Government is investigating the possibility of introducing a national regime for regulating finance broking. It is recommended you obtain your own legal advice on any impact this legislation will have on your business activities.

Do Not Call Register (DNCR)

The Commonwealth's Do Not Call Register Act prohibits certain unsolicited telemarketing activities to individuals. Australians can list their home and mobile telephone numbers on the Do Not Call Register and opt out of receiving a wide range of telemarketing calls. Before making a telemarketing call, callers should either know that they have the consent of the recipient of the call or check the DNCR to confirm that the intended recipient's telephone number is not listed.

The Telecommunications (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard further establishes minimum standards to be adhered to in undertaking telemarketing activities.

Additional information can be viewed at www.acma.gov.au.

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Code of Banking Practice

The Code of Banking Practice is an industry wide voluntary code of conduct for banks who are members of the Australian Bankers' Association. It is the banking industry's customer charter on best banking practice standards.

Westpac has adopted the Code which sets standards of good banking practice for dealing with personal and small business customers and their guarantors. The Code publicly sets out the key commitments and obligations to customers and covers the following four key areas.

  • Key commitments and general obligations - including compliance with all relevant laws such as consumer protection, privacy and discrimination
  • Disclosures - the requirement to disclose terms and conditions, fees and charges and exclusions of banking services we offer
  • Principles of conduct - including a general duty of confidentiality in relation to customer information and a requirement to exercise the care and skill of a diligent and prudent banker in assessing credit applications and to provide specified disclosure to guarantors
  • Dispute resolution, monitoring and sanctions - including the requirement to make available an internal and external dispute resolution process which meets the Australian Standard

If you'd like a copy of the Code of Banking Practice please visit any Westpac branch or visit the Australian Bankers' Association.

Corporations Act 2001

The Corporations Act regulates the activities of companies and related matters. Some recent amendments to the Corporations Act (particularly Chapter 7) have significantly changed the way in which financial services are regulated. Generally the provision of credit is not affected by these reforms.

However if you are considering entering into business as a finance broker and you are already a holder of an Australian Financial Services Licence (AFSL) you should obtain legal advice to ensure that this step is consistent with your obligations under that licence. If you are not already the holder of an AFSL, you may need legal advice to ensure any other services you provide do not require you to hold a licence (or be appointed an authorised representative of a holder of an AFSL). Entering into a Broker or Referrer Agreement with Westpac does not mean that you are an authorised representative of Westpac for the purposes of the Corporations Act.

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Privacy Laws

The key privacy law in Australia is the Commonwealth Privacy Act 1988. Credit reporting practices (including obligations on credit reporting agencies and credit providers as to how they hold, use and disclose "credit reports") have been regulated under the Privacy Act since its commencement. After amendments to the Privacy Act which came into effect in December 2001, all organisations must comply with the Privacy Act's 10 National Privacy Principles (NPPs) (further information about the Privacy Act, including details of the NPPs can be accessed through the Privacy Commissioner's website.

As an Introducer, you must ensure you handle personal information (that is information about an individual from which the identity of that individual is apparent or can reasonably be ascertained) in accordance with the Privacy Act.

In addition to compliance with privacy laws, Introducers are subject to obligations of confidentiality in handling information provided to them by Westpac in connection with their dealings with Westpac, including customer information and the terms of arrangements under any agreement between Westpac and the Introducer.

Read more about Westpac's Privacy Policy.

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