Commonwealth Consolidated Regulations Commonwealth Consolidated Regulations(1) This regulation is made for the following provisions of the Act:
(a) paragraph 121(2)(f) and subsections 121(3) and (3A) (credit proposal disclosure document of credit assistance providers for credit contracts);
(b) paragraph 144(2)(e) and subsections 144(3) and (3A) (lease proposal disclosure document of credit assistance providers for consumer leases).
(2) A description of the amounts of indirect remuneration must include the following:
(a) for each kind of indirect remuneration forming part of the total amount of indirect remuneration, a detailed description of the indirect remuneration, including the following:
(i) identification of each kind of indirect remuneration as indirect remuneration;
(ii) a clear explanation of the kind of indirect remuneration;
(iii) the person by whom each kind of indirect remuneration is payable;
(iv) the person to whom each kind of indirect remuneration is payable;
(v) a reasonable estimate of the amount of each kind of indirect remuneration, expressed as required by paragraph (b);
Example for subparagraph (ii)
Indirect remuneration that is a benefit described as an advertising subsidy or attendance at a conference.
(b) the reasonable estimate of the amount of each kind of indirect remuneration must be expressed in one of the following ways:
(i) in dollars;
(ii) as a proportion of the amount borrowed or total rental payments and a dollar amount;
(iii) as a range of amounts, expressed in dollars;
(iv) as a percentage of the amount borrowed or total rental payments and a dollar amount;
(v) if the indirect remuneration is in the form of a benefit--the estimated value of the benefit, expressed in dollars;
(c) a reasonable estimate of the total amount of indirect remuneration, expressed in dollars, likely to be received by each of the following:
(i) the licensee;
(ii) a credit representative of the licensee;
(d) a reasonable estimate of the total amount of indirect remuneration, expressed in dollars and based on the amounts estimated for each kind of indirect remuneration forming part of the total amount of indirect remuneration.
(3) The information mentioned in subregulation (2) must be set out in a way that is easy for the consumer to understand without being required to do any working out or to look elsewhere for additional information.
Information not required to be included
(4) The proposal disclosure document need not contain the information mentioned in paragraph (2)(c) for an employee or a director of the licensee (even if the employee or director is a credit representative of the licensee).
Assumptions
(5) For this regulation, a reasonable estimate of an amount of indirect remuneration may be made on the following assumptions:
(a) that the consumer will enter into the credit contract or consumer lease on the terms known to the licensee as at the time the consumer is given the proposal disclosure document;
(b) that the consumer will make the repayments required by the credit contract or consumer lease at the times required by the contract or lease;
(c) that, for an annual percentage rate or default rate, there will be no variation in the rate as disclosed over the whole term of the credit contract or any shorter term for which the contract applies;
(d) if the credit contract provides for a change to a variable rate, that the variable rate applicable over the term for which it applies is the same as the equivalent variable rate as at the time the consumer is given the proposal disclosure document;
(e) that, if the indirect remuneration, or any part of the indirect remuneration, is contingent on other credit assistance provided by, or activities conducted by, the licensee, the licensee may rely on credit assistance provided, or activities conducted, previously by the licensee for a similar period of time;
(f) that the method used to estimate the indirect remuneration in the proposal disclosure document will not change.
Payments to third parties
(6) The licensee's proposal disclosure document must state if indirect remuneration is likely to be paid by the licensee to a third party for the introduction of credit business or business proposed to be financed by the credit contract or consumer lease and, if so, must include information about:
(a) the person by whom each amount of indirect remuneration is payable; and
(b) the person to whom each amount of indirect remuneration is payable; and
(c) the amount of indirect remuneration, if known, or a reasonable estimate of the amount of indirect remuneration, expressed in accordance with paragraph (2)(b).
Example of a third party
Indirect remuneration that is payable to a real estate agent who refers a consumer to the licensee.
(7) The licensee's proposal disclosure document need not contain the information mentioned in paragraph (6)(c) if:
(a) the amount of indirect remuneration is contingent on the conduct of other consumers who may be referred to the licensee; and
(b) the proposal disclosure document includes information about factors contributing to the amount of indirect remuneration payable by the consumer.
Volume bonus arrangements
(8) The licensee's proposal disclosure document must set out a reasonable estimate of the maximum amount of indirect remuneration likely to be received by the licensee in relation to the credit contract or consumer lease that will result from a volume bonus arrangement.