The Assistant Treasurer has announced a review of the effectiveness of the law relating to small amount credit contracts (SACCs) in the National Consumer Credit Protection Act 2009 (Credit Act).

The review will also consider whether the provisions that apply to SACCs should be extended to consumer leases.

The panel will report by the end of 2015.

Small amount credit contracts
The terms of reference for the review require it to make recommendations about the effectiveness of, and where necessary recommend changes to, the following:

1. the requirement to obtain and consider a consumer’s bank account statements in subsections 117(1A) and 130(1A) of the Credit Act;

2. the rebuttable presumption that a loan is unsuitable where the consumer is in default under another SACC or has held two other SACCs in the past 90 days in subsections 118(3A), 123(3A), 131(3A) and 133(3A) of the Credit Act;

3. the prohibitions on entering into, or increasing the credit limit of, a loan contract that has a term of 15 days or less with a consumer, and on suggesting or assisting a consumer to do so in sections 124A, 133C and 133CA of the Credit Act;

4. the requirement to display a warning statement about the alternatives available to SACCs in sections 124B, 133C and 133CB of the Credit Act;

5. the cap on fees and charges (including the maximum of a 20 per cent establishment fee and of a monthly 4 per cent fee) in sections 23A, 31A, 31B and 39A of the National Credit Code;

6. the requirement that consumers who default under a SACC must not be charged an amount that exceeds twice the amount of the relevant loan in section 39B of the National Credit Code; and

7. the power to introduce specific protections for particular groups of consumers in sections 133C and 133CC of the Credit Act and the protections for consumers who receive 50 per cent or more of their income under the Social Security Act 1991 in regulation 28S of the National Consumer Credit Protection Regulations 2010.

The review will make recommendations on:

• whether a national database of SACCs should be established and if so, by whom and how it should be funded; and
• whether any additional provisions relating to SACCs should be included in the Credit Act, the accompanying regulations, or the National Credit Code.

The review will not recommend:

• the establishment of an additional body or the establishment of a further review(s);
• changes to any area of the law that the Commonwealth does not have the direct power to regulate.