The National Consumer Credit Protection Amendment (Small Amount Credit Contracts) Regulation 2014 was registered on 12 June 2014.

The Regulation clarifies the changes introduced on 1 July 2013 which imposed a cap on costs and a limit on fees that credit providers (excluding ADI’s) can charge consumers for small amount credit contracts.

A small amount credit contract provides credit of $2,000 or less for a term of at least 16 days but not longer than 1 year.

The Regulation:

• clarifies that the small amount lending cap applies to loans of $2000 even if an additional amount is borrowed for an establishment fee and first monthly fee;
• ensures that where short-term credit is provided to consumers, no additional amount including for a stored value card, membership fees or account keeping fees can be charged above five per cent of the amount of credit, and interest is capped at 24 per cent;
• ensures that credit providers (other than authorised deposit-taking institutions) are only able to charge, for continuing credit contracts, an initial fee of $200, and $125 per annum in any subsequent years, per client, regardless of the number of continuing credit contracts the client enters into; and
• prohibits the following persons from requiring or accepting payment by the debtor of a fee or charge in relation to a small amount credit contract:
  1. A person who introduces a debtor to a credit provider (whether or not the person is associated with the credit provider).
  2. A person who has been introduced to a debtor by a credit provider to provide a service in relation to a small amount credit contract (whether or not the person is associated with the credit provider).

You can download the updated National Consumer Credit Protection Regulations 2010 here.