Before the NCCP Act, consumer credit regulation in Australia was governed by individual state laws, which, while similar, lacked a cohesive national framework. The Uniform Consumer Credit Code (UCCC) was introduced in the 1990s to standardise these regulations across states, but it still fell short of providing comprehensive consumer protection.
The NCCP Act was passed by the Australian Parliament on 15 December 2009 and officially came into effect on 1 July 2010. This marked a transition from state-based regulations to a unified national regime aimed at better protecting consumers involved in credit transactions.
What is the NCCP Act in Australia?
The National Consumer Credit Protection Act 2009, or the NCCP Act, is legislation that’s designed to protect consumers and ensure ethical and professional standards in the finance industry.
Lenders and mortgage brokers must hold a credit licence or be registered as an authorised credit representative and must adhere to the rules set out in the NCCP.
The NCCP Act is regulated and enforced by ASIC in accordance with the National Credit Code (NCC).
The Act establishes a national framework for consumer credit regulation, replacing previous state-based laws, notably the Uniform Consumer Credit Code (UCCC)/
Which loans are regulated?
As a general rule, almost all home loan types and applications are regulated under the Act.
The rules for this are complicated, however, a loan is likely to be regulated if it meets the following conditions:
- The borrower is a natural person or a strata corporation; and
- A charge is made for providing the credit; and
- The credit provider provides the credit in the course of a business.
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The credit is provided wholly or predominately;
- For personal, domestic or household purposes; or
- To purchase, renovate or improve residential property for investment purposes; or
- To refinance credit that’s been provided wholly or predominately to purchase, renovate or improve residential property for investment purposes.
This means that most standard home loans are regulated under the NCCP Act.
What Is Not Covered By NCCP?
There are exceptions that aren’t regulated by the NCCP Act. Home loans that are unregulated include:
- Loans in the name of a company (i.e. not to a “natural person”); or
- Loans used predominantly to invest in commercial property, shares or a business.
There may be more flexible lending products available for these loan types, where no form of income verification is required. These are known as no doc loans.
Regulated vs unregulated loans in Australia
| Details | Regulated Loans | Unregulated Loans |
|---|---|---|
Definition | Loans are covered by the NCCP Act | Loans are not covered by the NCCP Act |
Licensing Requirements | Lenders must hold an Australian Credit Licence | No licensing requirements for lenders |
Consumer Protections | Strong protections, including responsible lending obligations and clear disclosure of terms | Limited protection, terms can vary widely. |
Regulatory Oversight | Subject to strict regulatory oversight by the ASIC | Minimal regulatory oversight |
Examples | Home loans, car loans, personal loans, credit cards, investment loans for residential property | Business loans, commercial property loans, buy now pay later products |
Borrower Types | Natural persons Strata corporations | Can be companies, trusts, partnerships and other entities. |
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What does ‘not unsuitable’ mean?
Your mortgage broker and lender are required by the NCCP act to provide you with a loan that isn’t unsuitable.
ASIC deems a loan to be not unsuitable if:
- It meets your requirements and objectives, and
- You have the ability to repay the loan without experiencing substantial hardship.
Examples of your requirements might be a fixed interest rate or an interest only period. Your objectives might be to buy a home or borrow enough money to consolidate your debts.
The lender’s borrowing power calculator (serviceability calculator) will assess your ability to repay the debt without hardship.
The term “not unsuitable” was chosen because this puts the responsibility onto the customer to prove that the loan was unsuitable rather than onto the lender to prove that the loan was suitable.
Customer feedback
We’re committed to complying with all regulatory legislation and we endeavour to find our customers the best loan product available. We appreciate any comments, compliments or complaints you may have that can help us improve our processes.
Please contact us on 1300 889 743 and direct your feedback as follows:
- Direct compliance or NCCP queries as well as compliments or complaints, to our Compliance Manager.
- Direct operational or process queries to our Operations Manager.
Find out more
If you’d like to learn more about the NCCP Act and how it’ll affect your home loan application, please call 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will get back to you within 24 hours.
Frequently Asked Questions
Who Does The NCCP Act Apply To?
It primarily applies to individuals and entities involved in credit activities, including:
- Credit Providers: Such as banks, credit unions, and finance companies that offer credit to consumers.
- Credit Assistance Providers: Including mortgage brokers and intermediaries who assist consumers in obtaining credit.
- Debt Management And Credit Repair Services: Including companies that help consumers manage debt, restructure loans, or improve credit scores, such as debt negotiation, settlement services, credit repair, and dispute resolution services.
- Consumer Lease Providers & Buy Now, Pay Later (BNPL) Services: Including companies that lease goods (e.g., furniture, electronics) to consumers under rental agreements, and certain BNPL services that charge fees or interest.
These individuals or entities must hold an Australian Credit Licence or be authorised credit representatives and must comply with responsible lending obligations set out in the NCCP Act.
What Happens If A Loan Is Partially For Business Use?
What Are The Key Protections Under The NCCP Act?
Can’t You Just Tell Me Which Lender Is Best?
Can You Give Me An Indicative Interest Rate?
What Does This Mean For Low-Doc Loans?
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