Offering credit
Many customers may decide to buy from you if you provide credit. Credit can be a good way to help customers pay for your services and, if you are fair with the terms and conditions, a good way to keep them loyal to your business.
But, if you do provide credit to your customers for personal, household or domestic use, and you charge for it, then you must comply with the Consumer Credit Code, the law governing all credit provision in Australia.
Types of credit covered by the Consumer Credit Code include:
- personal loans
- credit cards
- overdrafts
- housing loans
- mortgages
- hire of goods
- guarantees
- continuing credit accounts
- consumer leases.
The Office of Fair Trading offers a range of resources to help you and your customers better understand their rights and responsibilities under the Code.
To find out more about the Consumer Credit Code, view or download the legislation, including all amendments, or to find out what changes have recently been made or are planned, visit the Code's national website at: www.creditcode.gov.au
In New South Wales, additional requirements apply to some consumer credit contracts and related transactions. These provisions are set out in the:
Please note that the Consumer Credit Code shown at the back of the Consumer Credit (New South Wales) Act 1995, is in the form originally adopted and does not contain subsequent amendments. You can find an up-to-date version of the Consumer Credit Code on the national Credit Code website at www.creditcode.gov.au
If you are providing credit which is predominantly for personal, household or domestic use you will need more detailed information about credit contracts and contractual law and should contact a legal adviser.
Credit card fees
In August 2002, the Reserve Bank of Australia announced a number of reforms designed to improve efficiency and competition in Australia’s credit card system. Businesses have a number of obligations as part of the reforms. More information is available on the Credit card fees page.
Advertising credit
Credit advertising is regulated to ensure consumers are
not misled about the total cost or conditions of using credit. As with all
advertising, make sure that it is not false, misleading or deceptive.
If an advertisement includes a repayment amount, it must
contain the annual percentage rate or rates, and a statement as to whether fees
or charges are payable.
Where an advertisement contains the annual percentage rate, a comparison rate calculated according to a prescribed formula must also be shown.
A schedule of comparison rates must be available to consumers wherever credit is offered.
IMPORTANT – It is in your interest to
make sure your customers have all the information they need up-front so that the
chances of possible disputes are reduced.