The NCCP Act requires credit providers to lend responsibly and consider hardship requests genuinely. If a lender gave you credit you couldn't afford, or refused a legitimate hardship request before listing a default, these breaches may form grounds for challenging negative listings on your credit file.
What is the NCCP Act?
The National Consumer Credit Protection Act 2009 (NCCP Act) is Australian federal legislation that regulates consumer credit. It's the primary law governing how credit providers must behave when offering loans, credit cards, and other credit products to Australian consumers.
The NCCP Act introduced a national licensing regime for the credit industry and incorporated the National Credit Code (NCC), which sets out the rules for credit contracts. Together, these create a comprehensive framework designed to protect borrowers from predatory lending and unfair practices.
The legislation is administered and enforced by the Australian Securities and Investments Commission (ASIC), which has significant powers to investigate breaches and take enforcement action against credit providers who break the rules.
The NCCP Act is directly relevant to credit repair because defaults that result from irresponsible lending — loans you should never have been given — may be challengeable. Similarly, if a credit provider failed to properly consider hardship before listing a default, this can form grounds for removal.
The Australian Credit License (ACL)
One of the key features of the NCCP Act is the requirement for anyone engaging in "credit activities" to hold an Australian Credit License (ACL). This applies to:
- Credit providers — banks, credit unions, finance companies, BNPL providers
- Credit intermediaries — mortgage brokers, finance brokers
- Credit service providers — debt collectors, credit repair companies
License holders must meet ongoing compliance obligations, including maintaining adequate training, having proper dispute resolution processes, and complying with all relevant laws.
Our License
- Australian Credit Solutions holds Australian Credit License ACL 532003
- You can verify our license on the ASIC Professional Register
- We're bound by the same compliance obligations as banks and other credit providers
- ASIC can take action against us if we breach our obligations — this keeps us accountable
Responsible Lending Obligations
The NCCP Act's responsible lending obligations are among the most important consumer protections in Australian credit law. Before providing you with credit, a credit provider must:
Make Reasonable Inquiries
The lender must ask about your financial situation, including your income, expenses, existing debts, and financial objectives. They can't just take your word for it — they need to actively investigate.
Verify Your Information
The lender must take reasonable steps to verify the information you provide. This typically means checking payslips, bank statements, and your credit report. Simply accepting what you say isn't enough.
Assess Unsuitability
Based on their inquiries and verification, the lender must assess whether the credit contract is "not unsuitable" for you. This means checking whether you can repay the loan without substantial hardship.
Not Provide Unsuitable Credit
If the assessment shows the credit would be unsuitable — meaning you couldn't repay it without substantial hardship — the lender must not provide the credit.
What Counts as "Substantial Hardship"?
A credit contract is unsuitable if, to meet the repayments, you would have to:
- Sell your home or other essential assets
- Be unable to pay for basic necessities (food, utilities, medical care)
- Extend other debts or take on additional borrowing
- Significantly reduce your standard of living
Responsible Lending Looks Like
- Requesting and reviewing payslips and bank statements
- Asking about your regular expenses and existing debts
- Checking your credit report for existing obligations
- Calculating your debt-to-income ratio
- Assessing whether you can genuinely afford repayments
- Declining the loan if you can't afford it
Irresponsible Lending Looks Like
- Approving loans based only on your stated income
- Not asking about your expenses or existing debts
- Ignoring signs you already have too much debt
- Approving credit you clearly can't afford
- Using inflated income figures or understated expenses
- Rushing approval without proper assessment
If a lender breached responsible lending obligations by giving you a loan you couldn't afford, the resulting defaults may be challengeable. This is because the default wouldn't have occurred if the lender had followed the law. We've helped many clients remove defaults that resulted from irresponsible lending practices.
Your Hardship Rights
The NCCP Act gives you important rights if you're experiencing financial difficulty. Under the hardship provisions, you can request a variation to your credit contract if you're unable to meet your repayment obligations.
What You Can Request
A hardship variation might include:
- Reduced repayments — lowering your regular payment amount
- Extended loan term — spreading payments over a longer period
- Payment deferral — temporarily pausing payments
- Interest-only period — paying only interest for a set time
- Interest rate reduction — in some cases
The Credit Provider's Obligations
When you make a hardship request, the credit provider must:
| Obligation | Timeframe |
|---|---|
| Acknowledge your request | Within 21 days of receiving a written request |
| Make a decision | Within 21 days (or longer if they need more information) |
| Genuinely consider your request | Must not unreasonably refuse |
| Provide reasons if they refuse | In writing, explaining why |
| Tell you about options | Including external dispute resolution |
Credit providers cannot unreasonably refuse hardship requests. If they refused your request without proper consideration, or listed a default while a hardship request was pending, this may be grounds for challenging the default listing.
Unfair Contract Terms
The NCCP Act (through the Australian Consumer Law) also protects you from unfair contract terms in standard form credit contracts. A term may be unfair if it:
- Causes a significant imbalance in the parties' rights and obligations
- Is not reasonably necessary to protect the credit provider's legitimate interests
- Would cause detriment (financial or otherwise) if relied on
Examples of potentially unfair terms include clauses that allow the credit provider to:
- Unilaterally change the interest rate or fees without notice
- Terminate the contract for trivial breaches
- Impose excessive fees or penalties
- Restrict your ability to take legal action
If a contract term is found to be unfair, it is void — meaning the credit provider cannot enforce it against you.
How the NCCP Act Connects to Credit Repair
The NCCP Act is relevant to credit repair in several important ways:
1. Irresponsible Lending Claims
If a credit provider gave you a loan in breach of responsible lending obligations, and that loan resulted in a default, the default may be challengeable. The argument is that the default would not have occurred if the lender had followed the law.
2. Hardship Request Failures
If a credit provider listed a default after unreasonably refusing a hardship request, or while a hardship request was still being considered, this can form grounds for removal.
3. Procedural Breaches
The NCCP Act requires credit providers to follow specific procedures before taking enforcement action. Failure to follow these procedures can affect the validity of subsequent default listings.
4. Unfair Contract Terms
If a default arose from enforcement of an unfair contract term, the underlying basis for the default may be challengeable.
What We Look For
- Evidence the loan was unaffordable from the start
- Signs the lender didn't properly assess your ability to repay
- Hardship requests that were ignored or unreasonably refused
- Defaults listed while hardship arrangements were in place
- Procedural failures in the enforcement process
- Unfair contract terms that contributed to the default
ASIC Enforcement
The Australian Securities and Investments Commission (ASIC) is responsible for enforcing the NCCP Act. ASIC has significant powers including:
- Surveillance and investigation — monitoring compliance and investigating suspected breaches
- License conditions and suspension — imposing conditions on licenses or suspending/cancelling them
- Infringement notices — issuing penalties for certain breaches
- Civil penalties — seeking court orders for significant penalties
- Criminal prosecution — for serious offences
- Enforceable undertakings — negotiating binding commitments from credit providers
ASIC has taken action against numerous credit providers for responsible lending breaches, resulting in significant penalties and remediation for affected consumers. This demonstrates that the responsible lending obligations have real teeth.
What to Do If You Think the NCCP Act Was Breached
If you believe a credit provider breached the NCCP Act in relation to your credit:
- Gather your documents — loan contracts, correspondence, bank statements from the time of application
- Review the loan approval process — what information did they ask for? What did they verify?
- Check your hardship history — did you request hardship? How did they respond?
- Lodge a complaint — with the credit provider's internal dispute resolution (IDR) process
- Escalate if needed — to the Australian Financial Complaints Authority (AFCA)
- Consider professional help — credit repair specialists can identify NCCP breaches and build effective disputes