Question 1

The main regulator of the National Credit Code is:

Accepted Answer

The main regulator of the National Credit Code is the Australian Securities and Investments Commission (ASIC). ASIC is responsible for ensuring that financial service providers comply with the National Credit Code and other related regulations.

Question 2

Which of the following types of credit are regulated by the National Credit Code?

Accepted Answer

Personal loans from a finance company are regulated by the National Credit Code, while pawnbrokers and loans from employers are not.

Question 3

The National Credit Code applies to a credit contract when:

Accepted Answer

The National Credit Code applies to a credit contract when the debtor is a natural person and the credit is wholly or predominantly for personal or domestic purposes, or when the debtor is a strata corporation and the credit is wholly or predominantly for personal or domestic purposes.

Question 4

The National Credit Code came into force on 1 July 2010.Most credit contracts that were in existence before that date are:

Accepted Answer

The answer of The National Credit Code came into force...

Question 5

Which of the following is a remedy or penalty that may be imposed for a breach of the National Credit Code?

Accepted Answer

A civil penalty of up to $500,000 for each breach is a remedy or penalty that may be imposed for a breach of the National Credit Code. This penalty can only be imposed if the application is made by a credit provider or ASIC. The other options listed, such as withdrawal of a credit provider's license and criminal penalties, may also be potential remedies, but they are not listed as options in this question. The requirement to apologize and offer compensation through public advertisements is not a typical remedy for a breach of the National Credit Code.

Question 6

Credit contracts that are regulated by the National Credit Code include:

Accepted Answer

All of the options are regulated by the National Credit Code, hence the correct answer is D.

Question 7

Which of the following is a key requirement that a credit provider must include in an information statement that is given to a debtor before the making of a credit contract?

Accepted Answer

The answer of Which of the following is a key...

Question 8

Which of the following types of credit contracts are protected by the National Credit Code?

Accepted Answer

The National Credit Code applies to consumer credit contracts, including store accounts, but not to short-term credit (like those repaid in 30 days), insurance premiums, or credit from pawnbrokers.

Question 9

Some credit providers have the right to vary the terms of the contract.Variations may occur as a result of:

Accepted Answer

Credit providers have the right to vary the terms of the contract through unilateral changes, mutual agreement of the parties, or proof that the contract is unjust and causing hardship. Therefore, all of the above choices are correct.

Question 10

Mica borrowed $600 000 to purchase a residential property.She suffered a serious injury after a car accident and cannot make the repayments.Her credit provider has refused to delay and reduce her repayments.Which of the following statements is accurate in relation to Mica's rights under the National Credit Code?

Accepted Answer

The answer of Mica borrowed $600 000 to purchase a...

Question 11

Under the National Credit Code,the terms of a credit contract may be changed if:

Accepted Answer

The National Credit Code allows for changes to the terms of a credit contract if the contract contains unjust terms, causes hardship to the borrower, or if one or more of these conditions occur.

Question 12

Which of the following statements is not correct in relation to Chapter 3,which is aimed at informing consumers and deterring them from making unsuitable credit contracts?

Accepted Answer

This statement is not correct because credit providers are allowed to collect and verify information about a consumer's financial situation in order to assess whether a credit contract would be suitable for them. While privacy laws do protect consumers' personal information, this does not prevent credit providers from verifying their financial situation.

Question 13

Which of the following is not an essential requirement that must be satisfied for a credit contract to be regulated by the National Credit Code?

Accepted Answer

All of the other options are essential requirements for a credit contract to be regulated by the National Credit Code. The debtor must be a natural person or a registered proprietary company, the lender must have the right to impose charges for providing credit, and the credit must be wholly or predominantly for personal, domestic or household use.

Question 14

Heather borrows money from a business that specialises in short term 'pay day' loans.The loan will be regulated by the National Credit Code if:

Accepted Answer

The National Credit Code applies to loans where fees exceed 5% or interest exceeds 24% per annum, and if repayment is through direct debit, it further ensures regulation.

Question 15

Under the National Credit Code,consumers cannot be required:

Accepted Answer

Under the National Credit Code, consumers cannot be required to mortgage their right to their wages or superannuation, as these are protected to ensure individuals have access to their income and retirement savings.

Question 16

Which of the following statements is not correct in relation to s 76 of the National Credit Code which allows a court to reopen a contract because it is unjust?

Accepted Answer

Section 76 of the National Credit Code allows a court to reopen a contract if it is unjust. The court may take into account factors such as the relative bargaining powers of the borrower and lender, whether the borrower received independent advice, and the terms of the contract. However, there is no time limit mentioned in the section for making an application to reopen a contract. Therefore, option D, which states that an application to reopen a contract must be made within 12 months from when the contract ended, is not correct.

Question 17

Which of the following powers,remedies or penalties are not available to courts under the National Credit Code?

Accepted Answer

The answer of Which of the following powers,remedies or penalties...

Question 18

Which of the following credit contracts would not be covered by the National Credit Code?

Accepted Answer

The National Credit Code only applies to credit contracts that are entered into by individuals or strata corporations, and where the credit is used predominantly for personal, domestic or household purposes. Therefore, the loan to refinance a commercial investment property would not be covered by the Code.

Question 19

The National Credit Code applies to related transactions.Which of the following would qualify as a related transaction under the Code?

Accepted Answer

- Option A involves a contract to buy goods (gym equipment) using a loan, which falls under the National Credit Code. 
- Option B involves a guarantee for a home loan, which also falls under the National Credit Code. 
- Option C involves an insurance contract, which may not technically fall under the National Credit Code but is still relevant to the Code as it relates to consumer credit and loan repayments. Hence, all of the options (A, B, and C) qualify as related transactions under the National Credit Code.

Question 20

Which one of the following is not a key requirement that a credit provider must include in its pre- contractual statement to a prospective borrower?

Accepted Answer

The pre-contractual statement must provide information about insurance cover, credit fees and charges, interest charges, and other key terms of the credit contract. However, it is not necessary to include details about the credit provider's legal advisers.

Quiz 21: Credit Law and the Anti-Money Laundering and Counter-Terrorism Financing Act