Schedule 4: Low Cost Credit Contracts

Introduction

4.1 This Schedule applies to Low Cost Credit Contracts (LCCCs). LCCCs are regulated by the NCCP Act.

4.2 Certain types of credit arrangements, such as low-cost short-term credit (less than 62 days) that are not continuing credit contracts or LCCCs, insurance premiums paid by instalments, bill facilities and staff loans are not regulated as LCCCs under the NCCP Act and therefore do not fall under this Schedule.

About LCCCs

4.3 The legislative framework for LCCCs applies specifically to credit provided to Consumers. A LCCC generally enables a Consumer to purchase goods or services and make payments through instalments, typically without interest, but potentially subject to fees.

4.4 A LCCC typically involves three parties – you as the Consumer, a merchant who provides goods or services and with whom we have a direct relationship, and us as the LCCC provider. We directly or indirectly pay the merchant for the good or service provided to you and then we collect repayments from you.

4.5 In addition to our general commitments in this Code, we will take reasonable and appropriate steps to ensure that merchants with whom we have a direct relationship do not provide our LCCCs (including a BNPL arrangement) for online gambling, retail gambling, gambling at domestic or offshore casinos, or the purchase of firearms.

4.6 If we offer a consumer credit product where repayments are made in instalments and market this product as a BNPL arrangement, we will retain this commitment about restricting the use of this consumer credit product for gambling and firearms.

Obtaining a LCCC

4.7 We may allow you to apply for a LCCC in different ways, for example:

a. by applying to us directly (where we make this available to you);

b. through a merchant who offers our product.

Modified responsible lending

4.8 The responsible lending obligations in the NCCP Act have been “modified” in relation to LCCCs. As an LCCC provider, we can elect to apply the modified responsible lending obligations for LCCCs. The modified responsible lending obligations will only apply to the class of LCCCs covered by the election.

4.9 Under the modified responsible lending obligations, we will not enter into a LCCC with you unless we have:

a. made reasonable inquiries about your requirements and objectives in relation to the LCCC;

b. made reasonable inquiries about and take reasonable steps to verify your financial situation; and

c. assessed whether the LCCC will not be unsuitable for you.

4.10 There are inquiries we must make about your income, expenditure, other credit products you may have and your credit history. To do this we will obtain information about your income and expenditure, and any LCCCs, small amount credit contracts, consumer leases and/or consumer credit products that you currently have.

4.11 We can decide how we will obtain that information, provided we reasonably believe the information is substantially correct. We may make further inquiries if we cannot form a reasonable belief that the information is substantially correct – for example, because the information is unclear, inconsistent or there are signs of fraud.

4.12 We will have a written policy known as an “unsuitability assessment policy” that sets out processes for ensuring compliance with our legal obligations to assess whether a LCCC or credit limit increase of an LCCC is unsuitable. We will conduct regular reviews of this policy and update it when circumstances suggest the policy is no longer effective.

4.13 We will not enter into an LCCC with you unless we have undertaken reasonable inquiries and verification, and performed an unsuitability assessment in the last 120 days.

4.14 If, before entering into the credit contract (or increasing the credit limit), you ask us for a copy of the assessment that the LCCC is not unsuitable for you, we must give it to you before entering into the contract (or increasing the credit limit). We can provide this to you electronically.

4.15 If, during the period that starts on the day the credit contract is entered or the credit limit is increased (the credit day) and ends 7 years after that day, you ask us for a copy of the assessment, we must give you a copy of the assessment:

a. if the request is made within 2 years of the credit day—before the end of 7 business days after the day we receive the request; and

b. otherwise—before the end of 21 business days after the day we receive the request.

Credit reports

4.16 We will make inquiries about your credit history.

4.17 If the value of the LCCC being entered into, combined with the value of other LCCCs you have with us that are open, is less than $2000 at the time the LCCC is entered into (or after the credit limit is increased), we will seek to obtain a negative credit check about you (or rely on one already obtained within the last 120 days) which includes:

a. identification information;

b. details of any information requests by other parties;

c. default information;

d. payment information;

e. personal insolvency information;

f. information covered by section 6N(k) of the Privacy Act (which relates to publicly available information about you, your activities in Australia or the external Territories, and your creditworthiness);

g. new arrangement information; and

h. court proceedings information.

4.18 If the value of the LCCC combined with the value of other LCCCs you have with us that are still in force is equal to or greater than $2000 at the time the LCCC is entered into (or after the credit limit is increased), we will seek to obtain a partial credit check about you (or rely on one already obtained within the last 120 days) which includes:

a. the information set out at clause 4.17(a) to (h); and

b. your consumer credit liability information within the meaning of the Privacy Act.

Information about your LCCC

4.19 We will ensure all communication regarding your LCCC terms and conditions, fees, and repayment obligations is clear and provided in plain language as much as possible. However there may be times where the law requires us to use particular words or communicate with you in a particular way. We will provide electronic disclosure of relevant documents so that you can easily access your credit agreements, repayment schedules, and any changes in our terms and conditions.

4.20 To help you stay in control and make informed decisions about your use of our LCCCs we will provide clear and timely information about our product fees and features, and your obligations including repayment terms and consequences of missed payments including:

a. your scheduled repayments obligations and the amount and frequency of your scheduled repayments; and

b. fees and charges that may apply, including any fixed fees, variable amounts or charges and how and when they would be charged. If fees depend on certain behaviours (like late payment), we will explain the conditions.

4.21 This information will be provided to you before you enter the LCCC.

4.22 We will send you relevant and useful reminders about your repayment obligations. For example, we may remind you before a payment is due to help you avoid missed payments. These communications will be reasonable in frequency and designed to assist you.

4.23 While you have an open LCCC, you will be able to access your account statement on our digital platforms (such as our app or website), including each purchase and the total outstanding balance of your purchases, next payment due dates, and any fees charged.

4.24 If you are unable to access your statement electronically via our digital platform, you can request this information from us, and we will direct you on how to find it or provide it to you within 14 days if the information relates to a period that is 1 year or less from the date of request, or within 30 days if the information relates to a period of more than 1 year from the date of request.

Fees and charges

4.25 We will ensure that total fees you pay (including late fees) do not exceed the caps set by law. Specifically, we will never charge more than the regulated maximum fee in any given period – currently, no more than $200 in fees (other than default fees) in the first year of a contract and $125 in any subsequent year, with total fees including default fees capped at $320 in the first year and $245 in later years.

4.26 We will give you at least 20 days’ notice in writing before introducing new fees or increasing existing fees.

4.27 Our terms and conditions will explain the circumstances in which we can vary your contract and any notice period we must provide.

Missed payments

4.28 If you miss a payment, we will take reasonable steps to contact you via at least one channel such as email, SMS, or in-app notification before charging a late fee.

4.29 Where your LCCC is a BNPL arrangement, if you miss a payment or you miss more than one payment we may limit your ability to make further purchases or drawdowns until you meet your repayment obligations and your account is back in good standing. Our LCCC terms and conditions will say if our product has this feature and the circumstances in which we might limit the use of your account. We will also clearly tell you what you need to do to have your account re-instated (if we are willing to re-instate your account).

Minimum standards for merchants

4.30 We expect merchants with whom we have a direct relationship to meet minimum standards in connection with our LCCCs, including that they will:

a. act lawfully, fairly and ethically in their dealings with you;

b. communicate clearly when dealing with you and in marketing and advertising material that relates to LCCCs;

c. safeguard your confidentiality;

d. respond to complaints about their product or service on a timely basis;

e. require that their employees or agents understand the minimum standards and are trained to meet them; and

f. provide you with information that has been approved by us about our services, fees and charges in a format that is accessible to you.

4.31 We will have monitoring processes and policies in place for merchants with whom we have a direct relationship to ensure they meet these minimum standards on an ongoing basis.

4.32 Where your LCCC is a BNPL arrangement and is being used to finance home energy upgrades or improvements, such as solar panels, batteries or electric vehicle chargers under a government supported program, we will expect the vendors, sellers or distributors of these products with whom we have merchant agreements to be accredited as meeting the standards of conduct in the New Energy Tech Consumer Code.