ASIC has updated Information Sheet 105 Dealing with consumers and credit (INFO 105) to clarify the obligations of credit providers under new hardship procedures under the National Credit Act which commenced on 1 March 2013. Background

The update clarifies when credit providers are required to make a decision about whether a hardship variation is granted, particularly if there is a delay by the consumer in providing the information required to make a decision.

INFO 105 now states:

If the credit provider requests further information from the debtor, the debtor has 21 days to respond to the request.

If the credit provider does not receive any information from the debtor, the credit provider has 28 days from when the information was due to respond to the hardship notice.

If the debtor provides the information requested by the credit provider, the credit provider has 21 days from when the information was received to respond to the hardship notice.

However, there may be circumstances where it is appropriate to allow for flexibility in meeting the obligations – for example, where the debtor experiences a delay in getting medical reports from doctors, or certain financial information from an employer. The debtor’s circumstances may also make it difficult for them to respond to the information request in a timely way.

For these reasons, where a debtor has shown a willingness to comply with the request but is not able to provide all the information in the timeframe required, we are of the view that a credit provider may exercise their discretion to wait until all the requested information is received. This means that the final 21-day period to respond to the hardship notice will not commence until that information is received.

That discretion should be exercised appropriately and, where it is exercised, lenders should ensure that allowing additional time does not result in an unreasonable delay. We would consider an unreasonable delay may constitute, or be part of conduct constituting, unconscionable conduct. An unreasonable delay may exist where it is clear that no further information is likely to be forthcoming, and the continuing delay is likely to operate to the detriment of the debtor (e.g. through accruing unnecessary fees and interest).

Comlaw has published a consolidated National Consumer Credit Protection Regulations 2010 which incorporates National Consumer Credit Protection Amendment Regulation 2013 (No. 1) which contains the transitional provisions in relation to the hardship procedures.