Everything You Need To Know About The National Consumer Credit Protection Act 2009 (NCCP)
NCCP Act Explained
The NCCP Act – National Consumer Credit Protection Act 2009 – is legislation designed to protect the people that borrow money. It sets the foundation for professional and ethical standards in the finance industry.
According to this act, mortgage brokers and lenders must own a credit license or at least be authorised credit representatives. Obviously, they must also comply with the rules set out in the National Consumer Credit Protection Act.
Basically, this act regulates loans for both lenders and buyers, making the finance industry safer for those who wish to engage with it.
What Are Regulated Loans
Almost all home loan applications and types are currently being regulated under the NCCP Act. Even if the act itself comes with rather complicated rules as to which loans are regulated, it is known that most standard home loans are, in fact, regulated.
For example, a loan may be regulated if:
1. The borrower is labelled as a natural person.
2. The credit is a result of a charge.
3. The provider of the credit makes the credit available in the course of a business.
4. The credit is provided predominately or wholly for certain purposes – for domestic, personal, or household purposes, to renovate, purchase, or improve residential property (often for investment purposes).
What Are Unregulated Loans
Home loans that are unregulated are usually loans that are in the name of a company (not to a natural person) or loans that are mostly used to invest in a commercial property, business, or shares.
These loan types also come with some more flexible lending products, which don’t require any income verification – they are known as no-doc loans.
NCCP Act Legislation
With the new Act come new rights and obligations that have to be taken into account by consumers and mortgage brokers alike. Therefore, if you want to make sure that lenders act in your best interests, it is recommended that you get familiar with the entire NCCP legislation.
For example, the entire Act states more about things like credit quote, credit proposal, unsuitable credit contract, commissions and fees, preliminary assessment, intermediary, credit activity, and so on.
In short, it doesn’t matter whether you are a borrower or a lender, you have to be aware of everything mentioned in this act, especially if you want to do things right and avoid any sort of illegal practices.
The Bottom Line
The National Consumer Credit Protection Act is the new version of the legislation that was known as the Uniform Consumer Credit Code. The former includes the National Credit Code, as well as many aspects that are identical to the latter.
The act requires all organisations that provide credit to consumers – borrowers – to be licensed. Moreover, the Australian Credit License requires the licensee to be the member of an external dispute resolution scheme, thus making sure that consumers have ensured certain access to justice.
Given that this Act is rather complicated in its entirety, you may have certain questions or require more information. If that’s the case, you can contact us – our team of experts is here to help you in any way they can!
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So, why use Highline Lending for your home loan?
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
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With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution