Schedule 3 of the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 contains amendments to the NCCP Act (including the National Credit Code) which relate specifically to contracts for consumer leases, commencing on 1 July 2012.

Currently leases that contain a right or option to purchase are functionally the same as a credit contract and are therefore deemed to be credit contracts by the Code in section 9. Part 11 regulates consumer leases where there is no right or obligation to purchase the leased goods.

The Bill contains changes designed to achieve regulatory consistency between leases and credit contracts.

Some of the main regulatory differences between the two include:
• the form of consumer leases;
• the obligation to provide an information statement or statement of account;
• the content of the disclosure requirements;
• liability for conduct such as false and misleading representations; and
• the rights of lessees and lessors in respect of enforcement proceedings.

Lessees may mistakenly believe that they have an ability to buy the goods at the end of the lease when they do not.

What do you need to do?

If you provide consumer leases (as defined) then your procedures and systems will change.

If the Bill is passed, changes include:

• Lessors are required to provide an ongoing statement of account if requested by the lessee and an end of lease statement.
• Consumer leases can be changed on the grounds of hardship or on the basis the transaction is unjust.
• The lessor will be obliged to provide a statement of the amount payable on termination.
• The lessor will be obliged to inform the lessee when a direct debit default occurs.
• The lessee will have a right to terminate a lease in two different circumstances:
  • before the goods have been provided; and
  • after the goods have been provided.
• The Code provisions relating to enforcement matters will be extended to consumer leases
• Lessors will be liable for a supplier’s misrepresentation.
• A criminal penalty may be imposed on a lessor or supplier for harassment.