Small Amount Credit Contracts and Payday Loans

Australian Government , The ASIC Capability Review Panel, ‘Fit for the Future: A capability review of the Australian Securities and Investments Commission (December 2015).

Commonwealth of Australia , Financial System Inquiry Final Report (November 2014).

Senate Economics References Committee , Performance of the Australian Securities and Investments Commission (June 2014).

For a discussion of concerns about high cost, small loans, see, eg, Gillam Zac and Consumer Action Law Centre , ‘Payday Loans: Helping Hand or Quicksand’ (September 2010); Banks Marcus , ‘Caught Short: Exploring the Role of Small, Short-term Loans in the Lives of Australians’, Social Policy Unit, University of Queensland (August 2012) 5–9.

For example, Marcus Banks et al, above n 4, 30–1; Ali Paul McRae Cosima and Ramsay Ian , The Politics of Payday Lending Regulation in Australia’ (2013) 39 Monash University Law Review 41 1, 416–7.

See, eg, Financial Conduct Authority (UK) , Detailed rules for the price cap on high-cost short-term credit (PS 14/16, 2015); ‘Payday, Vehicle Title, and Centre High-Cost Installment Loans; Proposed Rule’, 81 Fed Reg 141 (22 July 2016) (Federal Register: The Daily Journal of the United States).

For credit assistance providers, see NCCPAss 113, 115–118, 123–124; for credit providers, see NCCPA ss 126, 128–130, 133.

National Credit Code (Sch 1 to the NCCPA) (‘NCC’), Part 2, Div 4, 4A.

Bill Shorten (Minister for Financial Services and Superannuation) , ‘Payday Borrowers Better Protected as Bill Passes Parliament’ (Media Release No 051,20 August 2012).

A description of the consultation process in the national context is in Ali et al, above n 5, 426–38.

For example, National Financial Services Federation, Submission to Commonwealth Treasury , ‘National Consumer Credit Protection Amendment (Enhancements) Bill 2011’, 5 September 2011, 15–7; 21–2.

Ibid 33–4.

ASIC v The Cash Store [2014] FCA 926 [5].

Ibid [6].

A ‘small amount credit contract’ (‘SACC’) is an unsecured loan, with a term of between 16 days and 1 year and a credit limit of $2000 or less; a ‘short-term credit contract’ (‘STCC’) is a contract with a term of less than 16 days and a credit limit of $2000 or less: NCCPA s5(I); NCC s 204(1).

The judgment refers to ‘customers’, however, the NCCPA obligations apply only to consumers, and so the term ‘consumers’ is used for consistency.

ASIC v The Cash Store [2014] FCA 926 [66].

Ibid [62].

Ibid [65].

Ibid [68].

Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liquidation) (No 2) [2015] FCA 93 [10].

Ibid.

ASIC , ‘Federal Court Orders Record Penalty’ (Media Release, 15–032MR), 19 February 2015.

Others include administration sanctions (eg, ss 54–6 and Part 2–4 NCCPA), infringement notices (s 331 NCCPA), enforceable undertakings (s 322 NCCPA), injunctions (s177 NCCPA), compensation orders (s 178 NCCPA), and adverse publicity orders (s 182 NCCPA).

ASIC's enforcement response is graduated, depending on, among other things, the seriousness of the conduct: Australian Securities and Investments Commission, ASICs Approach to Enforcement (Info 151, September 2013) 8–9. This graduation of enforcement responses is consistent with the ‘enforcement pyramid’ discussed in Ayres Ian and Braithwaite John , Responsive Regulation: Transcending the Deregulation Debate (Oxford University Press, 1992) 35–6.

See also Make it Mine Finance Pty Ltd; Re Make it Mine Finance Pty Ltd (No 2) [2015] FCA 1255 [112]-[113].

Another decision is AF&L First Mortgages Ltd v Suzann Owens [2014] VCC 1190.

See Lynch Nathan , ‘Lawyers Question the Impact of ASIC's Landmark Payday Lending Case’, Banking Day, 23 February 2015, <http://www.bankingday.com/nl06_news_selected.php?selkey=18215>.

See NCCPA ss 166(2), 167(2), 202; ASIC v Cash Store [2014] FCA 926 [76]–[77].

See NCCPA ss 118(2)(a) (for credit assistance providers), 131 (2)(a) (for credit providers).

Gillam and Consumer Action Law Centre , above n 4, 18.

NCCPA ss 118(3A), 131 (3A). Although the Interim Report of the Review of the Small Amount Credit Contract Laws proposed replacing the presumption with a ban on providing SACCs to consumers with two or more SACCs in the previous 90 days, the Final Report has recommended that the presumption be removed, and instead a broader protected earnings amount be implemented: See The Australian Government the Treasury , ‘Review of the Small Amount Credit Contract Laws: Interim Report’ (December 2015) 13; The Australian Government the Treasury , ‘Review of the Small Amount Credit Contract Laws: Final Report’ (March 2016) 22.

In another case, the parties agreed that various responsible lending provisions had been contravened: Make it Mine Finance Pty Ltd, in the matter of Make it Mine Finance Pty Ltd [2015] FCA 393 [64].

Wilson Therese Howell Nicola and Sheehan Genevieve , ‘Protecting the Most Vulnerable in Consumer Credit Transactions’ (2009) 32(2) Journal of Consumer Policy 117, 133, 135.

A recent report found that over a quarter of payday borrowers earned less than $30,000: Digital Finance Analytics and Monash University Centre for Commercial Law and Regulatory Studies, The Stressed Finance Landscape Data Analysis (October 2015), 23 <http://www.digitalfinanceanalytics.com/reports.html>. See also Banks , above n 4, 15–6.

For financial services contracts, see Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’), ss 12GND, 12GNB(I). For the forthcoming changes for small business contracts, see Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth).

ASIC Act, ss 20–2.

ASIC Act, s 12BF.

NCCPA, s 76.

Although the case law is not always consistent – see the discussion in Paterson Jeannie and Brody Gerard (2015) “‘Safety Net” Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models’, 38(3) Journal of Consumer Policy 331, 341–3.

ASIC v The Cash Store [2014] FCA 926 [28].

Ibid [34].

Ibid [35–38].

Ibid [43].

Ibid [52].

Ibid [47].

ASIC, RG209 Credit Licensing: Responsible Lending Conduct (15 November 2014).

Pearson Gail , Financial Services Law and Compliance in Australia (Cambridge University Press, 2009) 153.

ASIC , RG209, above n 47, 10.

See, eg, Vissenjous v ASIC [2015] AATA 98 [13]-[14]; Coshett v ASIC [2014] AATA 677 [16].

ASIC , ‘Payday lender Nimble to refund $ 1.5 million following ASIC probe’ (Media Release, 16–089MR, 23 March 2016).

ASIC , Payday Lenders and the New Small Amount Lending Provisions (REP426, March 2015); Australian Securities and Investments Commission , Review of Micro Lenders' Responsible Lending Conduct and Disclosure Obligations (REP264, November 2011).

Commonwealth of Australia , above n 2, recommendations 27–9; Senate Economics References Committee, above n 3, recommendations 9, 22, 41,47, 48, 50, 57, 58.

Australian Government , The ASIC Capability Review Panel, above n I.

Ibid 120.

The Australian Government the Treasury (Interim Report), above n 32, 7.

The Australian Government the Treasury (Final Report), above n 32, 11 (recommendation 1), 24 (recommendation 4), 31 (recommendation 7).

See ASIC Acts l(2)(a).