Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020
An Act to amend the law relating to unfair contract terms and insurance contracts, funeral expenses facilities, funeral benefits, mortgage brokers and mortgage intermediaries, and for related purposes
15 September 2023
Includes amendments up to Act No. 69, 2023
21 September 2023
Compilation information and notes on amendments.
1 Short title
The Act is the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020.
2 Commencement
1 Section 1
17 February
2 Section 2
5 April 2021.
5 April 2021
3 Section 3
The day after this Act receives the Royal Assent.
18 February
Note: This table relates only to the provisions of this Act as originally enacted.
3 Schedules
Legislation in schedules is amended or repealed according to its terms.
Temporal relation between schedules and the Act
Schedules are amended or repealed according to their terms
1 Subsection 12BA(1)
insurance contract means a contract of insurance to which the Insurance Contracts Act 1984 applies.
2 At the end of section 12BF
Applicability of Insurance Contracts Act to insurance contracts
Section applies to Insurance Contracts Act insurance contracts
3 At the end of subsection 12BI(1)
Insurance contracts must disclose transparent terms at or before entry.
4 At the end of section 12BI
Have regard to the main subject matter of the contract only to the extent that it describes what is being insured.
5 After subsection 12BL(1)
Exempts certain medical indemnity contracts from the Subdivision's application.
Negates the Subdivision's application for these contracts
6 At the end of subsections 12GND(1) and (2)
A person who is a third party beneficiary under the contract.
7 In the appropriate position
325 Application—unfair contract terms
325(1) Application—unfair contract terms
Amendments apply to contracts entered into on or after commencement of Schedule.
325(2) Application—unfair contract terms
Exempts contracts entered into before the commencement of Schedule 1 from the amendments.
325(3) Application—unfair contract terms
Applicable provision for unfair contract terms
(3) If paragraph (2)(b) of this section applies...
...subsection 12BF(2) and section 12BK of this Act apply.
325(4) Application—unfair contract terms
Exempts contracts from amendments if it would result in an unfair acquisition of property.
Prohibits the application of amendments to certain contracts.
The operation of the amendments would result in an acquisition of property from a person otherwise than on just terms.
Exempts contracts from amendments due to temporal overlap.
The operation of the amendments would result in an acquisition of property...
The exemptions apply during this time period.
Incorporates temporal logic to define the exemption period.
The amendments do not apply to a contract, or a term of a contract...
The exemptions are valid during this time frame.
Represents the exemption as a knowledge representation.
The exemptions are represented by this rule.
8 At the end of section 12
This Part operates in addition to the unfair contract terms provisions of the Australian Securities and Investments Commission Act 2001.
9 Subsection 15(2)
Omit all words after 'but does not' and substitute with specific clauses.
10 Application of amendments of the Insurance Contracts
Amendments of Insurance Contracts Act 1984 apply to Australian Securities and Investments Commission Act 2001
1 At the end of section 12BAA
Funeral expenses facility is not a funeral benefit for the purposes of this Act.
Funeral expenses facility is not a funeral benefit
2 Section 761A (at the end of the definition of funeral benefit)
Note: A funeral expenses facility is not a funeral benefit.
3 Section 761A
4 At the end of Subdivision D of Division 3 of Part 7.1
765B Funeral expenses facilities are not funeral benefits
Funeral expenses facilities are not considered funeral benefits.
1 Subsection 5(1)
References section 15A for definition of associate.
2 Subsection 5(1) (at the end of the definition of commission)
3 Subsection 5(1)
References for definitions of conflicted remuneration, mortgage broker, and mortgage intermediary.
4 After section 15
15A Meaning of associate
15A(1) Meaning of associate
Definition of associate for National Credit Code purposes
15A(2) Meaning of associate
Definition of associate in mortgage brokers regulations.
(2) In any other case, a person is an associate of another person in the circumstances prescribed by the regulations.
a person is an associate of another person
Associates are defined during specific circumstances.
circumstances prescribed by regulations: associates
15B Meaning of mortgage broker
15B(1) Meaning of mortgage broker
A licensee is a mortgage broker if they carry on a business of providing credit assistance in relation to credit contracts secured by mortgages over residential property.
(1) A licensee is a mortgage broker if: (a) the licensee carries on a business of providing credit assistance in relation to credit contracts secured by mortgages over residential property; and (b) the licensee does not perform the obligations, or exercise the rights, of a credit provider in relation to the majority of those credit contracts; and (c) in carrying on the business, the licensee provides credit assistance in relation to credit contracts offered by more than one credit provider.
15B(2) Meaning of mortgage broker
A credit representative is a mortgage broker if they meet specific conditions.
15C Meaning of mortgage intermediary
15C(1) Meaning of mortgage intermediary
Licensee must act as an intermediary in relation to credit contracts.
15C(2) Meaning of mortgage intermediary
Definition of credit representative as mortgage intermediary
5 After Part 3-5
158K Guide to this Part
Mortgage brokers must act in the best interests of consumers.
Credit assistance in relation to credit contracts.
Must act in the best interests of consumers.
158KA Doing acts
A reference in this Part to doing an act or thing includes a reference to causing or authorising the act or thing to be done.
158KB Circumstances in which a secondary representative is taken
158KB(1) Circumstances in which a secondary representative is taken
A secondary representative is authorized as a credit representative of a licensee by a primary representative.
Primary representative authorizes secondary representative
158KB(2) Circumstances in which a secondary representative is taken
Secondary representative acting within scope of authority
158KC Obligations under this Part in addition to other obligations
Obligations under this Part in addition to other obligations
158L Application of this Subdivision
158L(1) Application of this Subdivision
This Subdivision applies in relation to credit assistance provided by a licensee to a consumer in relation to a credit contract if the licensee is a mortgage broker.
The provision applies to credit assistance provided by a licensee.
(1) This Subdivision applies in relation to credit assistance provided by a licensee to a consumer in relation to a credit contract if the licensee is a mortgage broker.
The provision specifies the temporal scope of application for this Subdivision.
158L(2) Application of this Subdivision
Exemption from application of this subdivision for credit assistance provided by a credit representative acting within their actual or apparent authority.
(2) However, this Subdivision does not apply in relation to credit assistance provided by a credit representative acting within the scope of the credit representative’s actual or apparent authority from the licensee.
158LA Licensee must act in the best interests of the consumer
158LB Conflict between consumer’s interests and those of the
Licensee must give priority to consumer's interests when providing credit assistance.
Obligation to prioritize consumer's interests
158LD Application of this Subdivision
This Subdivision applies in relation to credit assistance provided to a consumer in relation to a credit contract by a credit representative acting within the scope of the credit representative’s actual or apparent authority from a licensee, if either the credit representative or the licensee is a mortgage broker.
The provision applies to credit assistance provided by a credit representative.
158LE Credit representative must act in the best interests of the
158LE(1) Credit representative must act in the best interests of the
Credit representative must act in the best interests of consumers.
Obligation to act in the best interests.
158LE(2) Credit representative must act in the best interests of the
Credit representative must comply with subsection (1)
158LF Conflict between consumer’s interests and those of the credit
Credit representative must know of conflicts between consumer's interests and those of the credit representative, licensee, or their associates.
The credit representative knows or reasonably ought to know...
...there is a conflict between the interests of...
Temporal overlap of knowledge and conflict
If the credit representative knows, or reasonably ought to know...
...that there is a conflict between the interests of...
Recurring trace of knowledge and conflict
158N Conflicted remuneration
158NA Regulations may further define conflicted remuneration
Ban on accepting conflicted remuneration
Prohibits accepting conflicted remuneration
158NB Licensee must not accept conflicted remuneration
Licensee must not accept conflicted remuneration
Prohibition of accepting conflicted remuneration
158NC Credit representative must not accept conflicted
158NC(1) Credit representative must not accept conflicted
Credit representative must not accept conflicted remuneration.
(1) A credit representative of a licensee must not accept conflicted remuneration in circumstances prescribed by the regulations if the credit representative or the licensee is:
158NC(2) Credit representative must not accept conflicted
158ND Employer must not give employees conflicted remuneration
158ND(1) Employer must not give employees conflicted remuneration
Employer must not give employees conflicted remuneration
158ND(2) Employer must not give employees conflicted remuneration
158NE Credit provider must not give conflicted remuneration
158NE(1) Credit provider must not give conflicted remuneration
Credit provider must not give conflicted remuneration to licensees in certain circumstances.
Credit provider must not give conflicted remuneration
Licensee must not receive conflicted remuneration
158NE(2) Credit provider must not give conflicted remuneration
Credit provider must not give conflicted remuneration to mortgage brokers and intermediaries.
Regulations prescribe circumstances for giving conflicted remuneration.
Credit provider must not give conflicted remuneration.
Temporal interval for conflicted remuneration
Conflicted remuneration is prohibited within specified circumstances.
Regulation applies to recurring traces of conflicted remuneration.
Regulation diffuses to all relevant parties.
158NF Mortgage intermediary must not give conflicted
158NF(1) Mortgage intermediary must not give conflicted
Must not give conflicted remuneration to licensees
Licensee is a mortgage broker or intermediary
Mortgage intermediary must not give conflicted remuneration
158NF(2) Mortgage intermediary must not give conflicted
Mortgage intermediary must not give conflicted remuneration to licensees or their representatives.
158T Anti-avoidance
Entering into a scheme to avoid application of provisions
Prohibits entering into a scheme to avoid application of provisions
The person must not enter into, begin to carry out or carry out the scheme.
Traces the scheme to its prohibited nature
The scheme has achieved, or apart from this section, would achieve, that purpose.
The scheme is traced to its prohibited nature.
Prohibits the person from entering into a scheme
The person is prohibited from entering into a scheme.
Prohibits the persons who entered into, began to carry out or carried out the scheme from doing so
The persons are prohibited from entering into, beginning to carry out or carrying out the scheme.
6 In the appropriate position
1 Definitions
amending Act means the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020.
2 Application of best interests obligations
Division 2 of Part 3-5A applies to credit assistance on or after July 1, 2020.
3 Application of ban on conflicted remuneration
Ban on conflicted remuneration applies to benefits given after July 1, 2020.
Prohibits benefits given after July 1, 2020.
Benefits given after July 1, 2020, overlap with the ban on conflicted remuneration.
7 Subsection 5(1)
8 Paragraph 92(e)
Omit 'commissions' and substitute 'indirect remuneration'
9 Section 111 (paragraph beginning “Division 5”)
Substitute 'indirect remuneration' for 'commission'
10 Subparagraph 113(2)(g)(i)
Substitute 'indirect remuneration' for 'commissions'
11 Subparagraph 113(2)(g)(ii)
Omit 'those commissions', substitute 'that indirect remuneration'
12 Subparagraphs 113(3)(b)(i) and (ii)
13 Division 5 of Part 3-1 of Chapter 3 (heading)
Omit 'commissions', substitute 'indirect remuneration'
14 Section 121 (heading)
15 Paragraph 121(2)(b)
16 Paragraphs 121(3)(a) and (b)
17 Section 134 (paragraph beginning “Division 5”)
Omit 'commission', substitute 'indirect remuneration'
18 Subparagraph 136(2)(g)(i)
19 Subparagraph 136(2)(g)(ii)
20 Subparagraphs 136(3)(b)(i) and (ii)
21 Division 5 of Part 3-3 of Chapter 3 (heading)
22 Section 144 (heading)
23 Paragraph 144(2)(b)
24 Paragraphs 144(3)(a) and (b)
25 Subparagraph 158(2)(g)(i)
26 Subparagraph 158(2)(g)(ii)
Omit “those commissions”, substitute ‘that indirect remuneration’.
27 Subparagraphs 158(3)(b)(i) and (ii)
28 Subparagraph 160B(2)(a)(i)
29 Paragraph 160B(2)(d)
17 Feb
Commencement dates for Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023
Requires temporal intervals for commencement dates
14 Sept
Conditional commencement of Schedule 1 item 10