The new penalties in the National Consumer Credit Protection Bill (discussed here) are in addition to the existing civil penalties in the Uniform Consumer Credit Code for breach of a key requirement.
The existing key requirement regime will be replicated in the National Credit Code including the ability of the credit provider to make their own civil penalty application seeking a declaration as to whether or not their conduct has in fact breached a key requirement (as defined in section 111 of the proposed new Code and section 100 of the UCCC).
Both the UCCC and National Code impose different maximum limits on the amounts that may be ordered as a civil penalty depending on who makes the application.
Where the debtor or guarantor makes the application, the maximum civil penalty is generally the interest payable under the contract, or the interest payable for the relevant billing cycle if the contravention was in respect of a statement of account. The Court may impose a greater civil penalty that is not less than the amount of the loss suffered where it is satisfied that the debtor has suffered loss. The Code enables any order to pay a debtor or guarantor a civil penalty may be set off against any amount that is due or becomes due under the credit contract. The amount of the civil penalty is a debt due by the credit provider to the debtor or guarantor.
Under the National Code, if the credit provider or ASIC makes the application, the Code caps the maximum penalty at $500,000 for all contraventions of the same key requirement in Australia. Payment of a civil penalty, where the credit provider or ASIC makes the application, is to be paid to ASIC.
Notwithstanding an application being made by the credit provider or ASIC, the debtor or guarantor may make a separate application for compensation for loss arising from convention of a key requirement. The amount of compensation cannot exceed the loss suffered.
The Code imposes a time limit of six years (from the date of the breach) in which a person may bring an application relating to a contravention of a key requirement.
An order for a credit provider to pay a civil penalty under the Code does not affect their criminal liability for any other offences against the Code or the regulations.
Section 183 of the UCCC (Section 201 of the National Code).provides for liability of officers of corporations which commit breaches.
