National Credit Code
ASIC administers a single national consumer credit regime contained in the National Consumer Credit Protection Act 2009 (National Credit Act), which includes the National Credit Code as Schedule 1 to the Act. The National Credit Act replaces previous state-based consumer credit codes and the Uniform Consumer Credit Code (UCCC) and applies to the conduct of Australian credit licence holders.
The National Credit Code applies to credit contracts entered into on or after 1 July 2010 where:
- the lender is in the business of providing credit
- a charge is made for providing the credit
- the debtor is a natural person or strata corporation
- the credit is provided wholly or predominantly:
- for personal, domestic or household purposes, or
- to purchase, renovate or improve residential property for investment purposes, or to refinance credit previously provided for this purpose.
The National Credit Code does not apply to certain loans, including: low-cost, short-term credit (less than 62 days), insurance premiums paid by instalments, bill facilities and staff loans.
Differences between the UCCC and the National Credit Code
The National Credit Code largely incorporated the UCCC. Key changes in the National Credit Code include:
- amended hardship provisions
- the removal of requirements for comparison rates schedules (except in credit advertisements, see Comparison rates)
- the inclusion of loans for residential investment properties
- the introduction of new default notice requirements.
The National Credit Code was a part of a larger reform process that introduced a licensing regime for lenders and brokers, which includes obligations such as responsible lending and mandatory membership of the Australian Financial Complaints Authority (AFCA).
On 25 September 2020, the Government announced proposed reforms to the responsible lending obligations contained in Ch 3 of the National Credit Act. The proposed reforms will amend the obligations that apply before entry into a credit product or the provision of credit assistance. ASIC’s guidance relating to the current responsible lending obligations will be reviewed and updated when the proposed reforms are finalised.
Part 10 of the National Credit Code requires that credit providers include a comparison rate when they advertise fixed-term credit which is for, or mainly for, personal domestic or household purposes. The comparison rate includes:
- the interest rate
- most fees and charges.
For example, if a lender advertises an interest rate of 5.49%, its comparison rate might be 5.75%. The comparison rate regime aims to inform consumers of the true cost of credit that applies to a specific credit product and make it easier for consumers to compare the different credit products available on the market.
A comparison rate does not include all fees and charges. For example, the comparison rate does not include:
- government fees and charges
- charges that are only charged in certain circumstances (e.g. if you pay off the loan early).
The comparison rate only allows comparison based on cost, and will not include other factors that may make a loan more attractive, such as access to fee-free accounts or flexible repayment arrangements.
For more information about comparison rates, visit Choosing a home loan.
- Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205)
- Information Sheet 146 Responsible lending disclosure obligations: Overview for credit licensees and representatives (INFO 146)
- Information Sheet 135 Annual compliance certificates for credit licensees (INFO 135)
- Information Sheet 136 Complying with your trust account obligations as a credit licensee (INFO 136)
- Information Sheet 126 Credit representatives (INFO 126)
- Regulatory index – Credit
- Laws we administer