ASIC has issued Credit (Amendment) Instrument 2018/114, which amends Class Order 14/41 as it applies to providers of consumer credit and consumer leases.

The newly made instrument extends the exemptions granted under transitional regulations (set out in ss 69A and 69B of the NCCP Regulations 2010) that relieve credit providers and lessors from the obligation to provide a written response to a hardship notice in certain circumstances.

For industry and consumers, this extends the arrangements for credit hardship that are currently in place. It allows flexibility for both sides in dealing with a simple hardship arrangement.

The exemption was due to expire on 1 March 2018 and now extends until 1 March 2020. This will allow ASIC time to continue to consult with industry and affected stakeholders in relation to the hardship process and the interaction with credit reporting requirements. 

Background

ASIC is the national regulator for consumer credit and consumer leases under the national credit legislation. The laws ASIC administers in relation to credit include responsible lending obligations and protections around hardship.

Where a consumer is experiencing financial difficulties in repaying their loan, a consumer may ask their credit provider to vary or change their loan repayments under the hardship provisions of the National Consumer Credit Protection Act 2010 (National Credit Act). The procedures for processing hardship variation applications require credit providers and lessors to record any changes to the contract and provide written notice to the debtor or lessee. This is the case even where the parties come to an agreement for a simple arrangement, which means an agreement that defers or reduces the obligations of a debtor or lessee for a period of no more than 90 days.

The exemption for simple arrangements was introduced in 2013 following changes to the hardship provisions of the National Credit Act.

ASIC's MoneySmart website has guidance for consumers on how to apply for hardship variation.