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Uniform Consumer Credit Code

Discussion in 'Investing Glossary' started by Glossary, 27th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006
    A uniform set of consumer protection legislation introduced in November 1996 by each of the states to regulate lending to consumers.

    Also known as the "Consumer Credit Code". Under the Code and associated regulations there are numerous protections afforded to borrowers and guarantors provided the loan involved is wholly or predominantly for personal, domestic or household purposes. What that means is that investment loans are not regulated by the Code.

    Amongst the great pile of paperwork which banks require from investors is a statement about the loan purpose (often referred to as a section 11 statement). This is where the borrower certifies that the loan is not wholly or predominantly for personal, domestic or household purposes.

    Some of the protections provided include stringent disclosure obligations in relation to fees and charges and also there are "hardship" provisions which let a borrower try to renegotiate their position with the lender in cases of genuine personal hardship. The regulations supporting the Code can be very prescriptive, specifying for example the minimum font size for use in documents and mandatory warning boxes which must appear on loan and security documents.

    Whilst the introduction of the Code is a positive for personal borrowers, compliance costs have been high for the lending institutions, costs which are no doubt passed onto the customer. The aim of this legislation is noble, but some critics consider that it has largely resulted in the consumer being bombarded with extra paper work, rather that providing genuine consumer protection.

    Also known as:
    • Consumer Credit Code
    • UCCC