Bill facilities now covered by UCCC
To date, bill facilities have been expressly exempt from the provisions of the Uniform Consumer Credit Code (UCCC) because they were usually provided for commercial purposes. However the exemption has been utilised by some opportunistic lenders, in particular what are termed "fringe lenders", to evade the provisions of the UCCC.
New Regulations have now been passed bringing bill facilities provided by fringe lenders within the ambit of the UCCC. Accordingly, as for other credit facilities, the terms of the UCCC will now apply to such facilities when the credit is provided wholly or predominantly for "personal, domestic or household purposes".
The Consumer Credit (Bill Facilities) Amendment Regulation (No. 1) 2007 (Qld) (the "Regulations") came into effect on 30 November 2007. The Explanatory Notes to the Regulations state that the bill facility exemption conflicted with the UCCC's policy objectives of ensuring that credit laws apply equally to all forms of consumer lending and to all credit providers. They say that by using bill facilities, lenders, in particular "fringe lenders" have been able to avoid, inter alia, interest rate caps and the UCCC's provisions in respect to debt collection practices.
However, an exemption applies in respect of a bill facility provided by an authorised deposit-taking institution ("ADI") as defined in the Banking Act 1959 (Cth). ADI's include the major banks and other institutions. The exemption has been retained in respect to ADIs to allow these institutions to continue to provide credit via bill facilities to high net worth individuals for domestic purposes.
Ross Rydge, Senior Associate, Sydney
