Commonwealth Consolidated Regulations

NATIONAL CONSUMER CREDIT PROTECTION REGULATIONS 2010 - REG 28LC

  (1)   This regulation:

  (a)   is made for the purposes of the following provisions of the Act:

  (i)   paragraph   164(d);

  (ii)   paragraph   118(2)(c) (when the credit contract must be assessed as unsuitable--entering the contract or increasing the credit limit), as modified by subregulation   (2);

  (iii)   paragraph   123(2)(c) (prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts), as modified by subregulation   (3);

  (iv)   paragraph   131(2)(c) (when credit contract must be assessed as unsuitable), as modified by subregulation   (4);

  (v)   paragraph   133(2)(c) (prohibition on entering, or increasing the credit limit of, unsuitable credit contracts), as modified by subregulation   (5); and

  (b)   sets out circumstances in which a credit contract is unsuitable.

Modifications of Act

  (2)   For the purposes of paragraph   164(d) of the Act, the provisions to which Part   3 - 7 of the Act applies apply as if paragraph   118(2)(c) of the Act were varied to read:

  "(c)   if the regulations prescribe circumstances in which a credit contract is:

  (i)   unsuitable; or

  (ii)   unsuitable unless the contrary is proved;

    those circumstances will apply to the contract;".

  (3)   For the purposes of paragraph   164(d) of the Act, the provisions to which Part   3 - 7 of the Act applies apply as if paragraph   123(2)(c) of the Act were varied to read:

  "(c)   if the regulations prescribe circumstances in which a credit contract is:

  (i)   unsuitable; or

  (ii)   unsuitable unless the contrary is proved;

    those circumstances will apply to the contract;".

  (4)   For the purposes of paragraph   164(d) of the Act, the provisions to which Part   3 - 7 of the Act applies apply as if paragraph   131(2)(c) of the Act were varied to read:

  "(c)   if the regulations prescribe circumstances in which a credit contract is:

  (i)   unsuitable; or

  (ii)   unsuitable unless the contrary is proved;

    those circumstances will apply to the contract;".

  (5)   For the purposes of paragraph   164(d) of the Act, the provisions to which Part   3 - 7 of the Act applies apply as if paragraph   133(2)(c) of the Act were varied to read:

  "(c)   if the regulations prescribe circumstances in which a credit contract is:

  (i)   unsuitable; or

  (ii)   unsuitable unless the contrary is proved;

    those circumstances will apply to the contract;".

Circumstances

  (6)   A circumstance in which a credit contract is unsuitable unless the contrary is proved is that:

  (a)   the credit contract is part of an arrangement that is a reverse mortgage; and

  (b)   at the time the credit contract is entered into, the youngest borrower under the reverse mortgage is 55 or younger; and

  (c)   the loan to value ratio of the mortgage is higher than 15%.

  (7)   A circumstance in which a credit contract is unsuitable unless the contrary is proved is that:

  (a)   the credit contract is part of an arrangement that is a reverse mortgage; and

  (b)   at the time the credit contract is entered into, the youngest borrower under the reverse mortgage is older than 55; and

  (c)   the loan to value ratio of the mortgage is the sum of;

  (i)   15%; and

  (ii)   1% for each year that the borrower is older than 55.

Note:   Examples of unsuitable loan to value ratios are:

(a)   if the youngest borrower is 60, a loan to value ratio that exceeds 20% is unsuitable unless the contrary is proved; and

(b)   if the youngest borrower is 70, a loan to value ratio that exceeds 30% is unsuitable unless the contrary is proved.

  (8)   In this regulation:

"loan to value ratio" , in relation to a reverse mortgage over a reverse mortgaged property, is:

where:

A is the amount of credit owed under the credit contract for the reverse mortgage.

B is the value of the reverse mortgaged property.