Responsible lending obligations: saving borrowers from themselves

Credit legislation often has a "sting in the tail" - something that was not readily apparent when the legislation was first framed but then comes back to haunt credit providers down the track.

We are reminded of what happened under the Credit Act 1984 (Cth) where there was an automatic loss of entitlement to interest charges in circumstances where certain disclosure or other requirements in that legislation were not observed.

While the uniform Consumer Credit Code which operated from 1996 to 2010 was a generally benign piece of legislation, the same cannot now be said for the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act).

The issue of "responsible lending" under the National Credit Act is fast becoming a major area of concern for credit providers, lessors and credit assistants.