Finance brokers must comply with the Consumer Credit Code or risk costly penalties of up to $500,000 for major breaches of the Code. The Consumer Credit Code covers individuals who receive credit for personal or household use in the form of personal loans, credit cards, overdrafts, housing loans, pay day loans, mortgages and continuing credit accounts. So what are your main responsibilities when dealing with consumers in upholding the Consumer Credit Code?

The Consumer Credit Code stipulates what steps you must take and what information and documentation you must provide to the consumer when they are applying for finance.

The pre-contractual statement
Firstly, you must provide a pre-contractual statement prior to the loan being finalised. This pre-contractual statement details information about the credit being offered, and must include:

• the amount of credit, or maximum amount available
• the annual percentage rates that apply to the credit
• details of any interest-free period that may be provided
• total interest payable if the credit is to be repaid within 7 years
• the amount of the repayments, how many repayments will be made and the frequency (ie weekly, monthly etc)
• fees and charges payable.

Other details should also be included in the pre-contractual statement including the name of the credit provider, details of any changes that can be made to the contract, details of any commissions payable and if any insurance is financed under the contract.

The contract for the credit
The contract should include all of the information required in the pre-contractual statement. It’s also worth noting that the type size of the contract should be no smaller than 10 point. It should also be written in such a way that the consumer will be able to understand.

When the contract is completed, you must provide a signed copy of the statement to your customer within 14 days.

Regular account statements
The consumer must also receive regular statements throughout the term of the credit:

• at least every 40 days for continuing credit contracts accessed by a card
• between 40 days to 3 months for other continuing credit contracts, and
• no longer than every 6 months for other credit contracts.

Regular statements should advise the consumer of:

• opening and closing balances
• statement start and end dates
• interest, insurance payments and other fees and charges
• annual percentage rate, including any changes to the rate
• transfers and payments to and from other accounts
• minimum amount payable and when the payment is due
• any adjustments or corrections.

Enquiries from the customer
The Consumer Credit Code also stipulates that customers can request information regarding the following details of their loans:

• the current account balance
• any overdue payments and their due dates
• amounts payable and their due dates, and
• any amounts credited or debited from their account.

Any information requested must be provided within 14 days. If the information required relates to the account more than 12 months ago, then you must provide the information within 30 days. The customer can also request that you answer the enquiry in writing.

For more information about your obligations under the Consumer Credit Code, visit www.creditcode.gov.au.