The National Consumer Credit Protection Act (NCCP)

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The National Consumer Credit Protection Act (NCCP Act) prohibits credit providers from making unconditional representations to potential customers that the customer is eligible to enter into a credit contract with them, or that a credit limit of a credit contract will be able to be increased, unless the credit provider has conducted a credit assessment that the new credit is ‘not unsuitable’ for the customer. Banking and finance lawyers should be mindful that this has an real impact on the way a credit providers are able to market credit products to customers upfront, as well as the prohibition under Australian Securities and Investments Commission Act (ASIC Act) from engaging in conduct that is misleading or deceptive, or likely to mislead …show more content…

Given the credit assessment cannot be made until the credit provider makes reasonable inquiries about the customer’s financial situation and requirements and objectives, and has taken reasonable steps to verify the customer’s financial information , and then taking into consideration the findings of those inquiries and objectives, made an assessment that the credit contract or credit limit increase is “not unsuitability” for the customer, then any upfront marketing that suggests a customer can take out credit, must be carefully disclaimed with a statement that any decision to lend is subject to credit assessment. This particularly impacts website and social media advertising, customer borrowing capacity letters and online calculators, indicative approval letters and any verbal statements made by the credit …show more content…

Further, for products that may result in possible tax deductions (for example, investment loans) credit providers should be careful not to misrepresent the benefits and must particularly avoid providing any taxation benefits advice to customers. ASIC has also provided guidance that Australian Credit Licensees should carefully consider whether promotional claims about ‘no-doc’ type products given the need for them to verify financial situation, as well as claims that approval can be given with ‘no credit checks’. To ASIC, these could be either misleading, or they could reflect practices that do not comply with responsible lending

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