The Consumer Credit Code will be amended to facilitate electronic contracts and electronic notices. The e-commerce amendments to the Consumer Credit Code have now been passed, but are still to be proclaimed. The final regulations have been gazetted, but are also yet to be proclaimed. Proclamation will occur at some point after the Queensland election, to be held on 9 September 2006.

This alert updates our April 2006 alert about the Consumer Credit and Trade Measurement Amendment Bill.

The amendments¹ and the regulations²:

• remove some e-commerce ambiguities in the Code
• make state-based electronic transactions legislation applicable to the Code
• provide that most contracts can be formed, and most documents and notices may be sent, electronically under the Code.

The amending Act also extends the sunset date for the mandatory comparison rates provisions to 30 June 2007. This will allow a review of those provisions to be completed. The provisions extending the sunset date have already commenced.

The main amendments are discussed briefly below.

Writing requirements

Agreement “in writing” (which includes by electronic means) is sufficient to alter a credit contract as an alteration no longer needs to be signed or initialled in the margin.

Legibility and language

Mortgages are now subject to legibility and language requirements under the Code. Electronic communications must be legible, clear and conform with any relevant regulations. Specific format requirements are discussed below.

Copies of contracts and other documents

Specific provisions for providing a copy by fax have been removed as this is covered under the relevant electronic transactions legislation.

Electronic contracts

Credit contracts, mortgages and guarantees can be formed electronically in accordance with electronic transactions legislation.

Electronic transactions and documents

The Code is subject to the relevant electronic transactions legislation and provides that requirements for various permitted and required actions under the Code, such as giving information in writing, can be satisfied electronically. However, the regulations provide that specific transactions, documents or information, or classes of the same, cannot be made or given electronically. For example, the regulations exclude documents relating to regulated guarantees, enforcement procedures, and certain documents that only attract stamp duty when in hard copy and notices to repossess.

Giving notice and documents electronically

Where the Code lists the way in which notice or a document can be given (such as by post, telex or fax), references to “similar facilities” have been replaced with provisions for “electronic communication”. Also, a debtor, guarantor or mortgagor can nominate an electronic address for correspondence.

However, to be able to use electronic communications for notices or other documents credit providers will need to obtain the consent of the debtor, guarantor or mortgagor. Consent must be in the form of a specific positive election after the debtor, guarantor or mortgagor has been notified that:

• paper documents will no longer be provided
• electronic communications should be checked regularly for notices, and
• consent can be withdrawn at any time.

Additionally, if notices and documents are given electronically:

• the notices or documents must be available for a reasonable period of time on the credit provider’s information system
• there must be prompt notification electronically to the consumer of these notices or documents, and
• the credit provider must enable the consumer to readily retrieve the information by electronic communication.

Any notices or documents given electronically are subject to the following requirements relating to format.

• They must be in a format that can be printed and saved to an electronic file.
• At the time these are sent, the credit provider must reasonably expect that a consumer would be able to print or save this information to an electronic file.
• The document must not incorporate any image, message, advertisement or other feature that is likely to distract the recipient, or adversely affect their ability to understand the document.
• Any such additional material must be readily distinguishable from the document.
• The recipient must be readily able to scroll through the whole of the document.
• The document must include a street address and telephone number at which it may be contacted.

Date of notices and documents

Any notices or documents sent electronically will be counted as being given when the electronic communication enters the addressee’s information system. This cannot be altered by agreement, unlike in the electronic transactions legislation.

Attribution of electronic communications

Electronic communications will bind the originator if sent by the purported originator or with their authority. Alternatively, the originator will be bound by the communication in accordance with the Electronic Funds Transfer Code of Conduct (EFT Code) if both parties have agreed that the EFT Code applies to the electronic communication.

Definitions

“Electronic communication” and “information system” are both defined very broadly and are technology neutral.³

Footnotes

¹ See the Consumer Credit and Trade Measurement Amendment Act 2006 and Explanatory Memorandum.

² See the Consumer Credit Amendment Regulation (No. 1) 2006.

³ These definitions replicate the general definitions in the state-based electronic transactions legislation.