Credit and loans – your consumer rights

Different organisations look after the various aspects of the credit and lending system in Australia. 

NSW Fair Trading

We provide information about your consumer rights and protections. We can also help you with complaints and enquiries about finance brokers.

Australian Financial Complaints Authority (AFCA)

Find out how to lodge a complaint with the Australian Financial Complaints Authority (AFCA). The AFCA is an external dispute resolution scheme to deal with complaints from consumers and small businesses about financial services and products. 

Find out how to lodge a complaint with the AFCA.

Australian Securities and Investments Commission (ASIC)

ASIC is the regulatory body that regulates banks, credit unions and brokers to ensure that they do not give credit that you cannot pay back. ASIC also takes action against financial service providers who mislead, are deceptive or demonstrate unconscionable conduct (conduct so harsh it goes against good conscience). 

Your consumer rights

Australian Consumer Law guarantees your rights when you buy goods and services. Most products and services come with an automatic consumer guarantee that what you bought will work and do what you asked for.

This includes credit and loan services.

You have the right to receive:

• services that are of acceptable quality. That means they are provided with due care or skill, in a reasonable time and that they are fit for purpose.
• remedy when things go wrong.
• proof of purchase such as an invoice or receipt.
• documentation of any contract.

Credit and loan contracts

Credit providers, including lenders and finance brokers are subject to Australian consumer credit laws for loans longer than 62 days.

The National Credit Code (NCC) governs the way credit providers can lend credit to consumers, ensuring they inform you about:

• the product or service you’re receiving
• the contract terms, and
• any associated fees and charges.

Note: the NCC does not apply to low-cost short-term credit (under 62 days in duration).

Transparent advertising

When advertising, credit providers must:

• include a comparison rate when advertising fixed-term credit (for domestic purposes)
• include the interest rate and applicable fees and charges
• not include government fees and charges, or one-off fees (like early payouts).

Information before you sign

Credit providers must give you a pre-contractual statement and an information statement before you enter a contract with them. This includes:

• credit provider name and licence number
• contact details
• amount of the credit
• repayment terms
• percentage rate
• fees and charges
• advice of your right to complain and access an external dispute resolution scheme
• your statutory rights and obligations under the contract.

During the contract

Your credit provider must give you periodic statements of account, so you can:

• stay up-to-date with payments
• know how much you have left to go on the contract.

Changes to the contract

If there is a change clause in your contract, credit providers may be able to change the details of your contract.

The change clause will include details on how you’ll be informed of any changes. Providers must tell you when they make any changes to the contract.

Learn more about contracts.

Checking your credit rating

Credit reporting agencies hold information on your credit history. This information can include loan applications or enquiries made through member subscribers, late payment and default history, address and employment details.

To get a copy of your credit file, call one of the credit reporting agencies listed below or visit their website.

Equifax Credit Report
Telephone: 138 332
Website: www.mycreditfile.com.au

Illion
Telephone: 1300 734 806
Website: www.checkyourcredit.com.au

Correct your credit report

Credit reporting bodies must take reasonable steps to ensure the information on your credit report is right.

If you believe that information on your report is wrong, start by asking for a free copy of the report from one of the credit reporting agencies above.

For step-by-step guidance on getting your credit report corrected, see the Office of the Australian Information Commissioner website.

Tips when using credit

• Pay your account in full each month whenever possible.
• Take advantage of any interest free period.
• Use your card for purchases only, not cash advances.
• Use debit cards that deduct money straight from your bank account rather than credit cards, which charge interest.
• Remember that department store cards may have higher interest rates than other credit cards.
• Don’t treat credit cards as money on tap.
• Don’t buy something on credit that you wouldn't have bought for cash.
• Don’t ignore the warning signs such as reaching your credit limit or needing to use your card for a cash advance.

Credit insurance

Consumer credit insurance covers you in case you can’t make repayments.

Credit providers can’t force you to take out this insurance. However, they can insist that you insure mortgaged goods against loss or damage. For example, by getting comprehensive insurance on a motor vehicle.

The insurance doesn’t have to be arranged through the lender, NSW Fair Trading encourage you to shop around.

Learn more about insurance.

Early payout and termination fees

An early payout fee may be charged when you pay back the total amount of money owed under a contract before it expires. This charge is usually found in home loan contracts.

Credit providers must either

• disclose early payout fees in the original credit or loan contract, or
• give you notice in writing before they introduce such a fee.

Finance brokers

Finance brokers negotiate with banks, credit unions and other credit providers on your behalf to arrange a loan.

Credit providers often pay brokers a fee or a commission when the broker sells one of their products. This may influence which products a broker recommends.

By law, finance brokers must:

• use written, signed contracts
• keep records for 7 years.

They are not allowed to:

• charge excessive fees
• take payment before your credit is secured.

If you are dissatisfied with a broker’s service, follow these steps to resolve the issue.

Where to go for help

MoneySmart is an Australian Government website with lots of free, unbiased information and tools to help with your finances.

Australian Financial Complaints Authority provides consumers with fair, free and independent dispute resolution for financial complaints.