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Clause 16 provides that the contract must conform to the requirements of the regulations as to its form and the way it is expressed. This is intended to ensure that, as far as possible, documents are user friendly and that consumers, when entering into transactions, understand the extent of their rights and obligations. A copy of the contract is required to be given to the debtor and it is possible for a consumer to terminate a contract even though the contract has been entered into, provided that no credit has been obtained or attempted to be obtained under the contract.

I would also draw members' attention to the provisions in the legislation dealing with mortgages and guarantees. One important provision is the prohibition on third party mortgages. This prohibits a credit provider from entering into a mortgage to secure obligations under a credit contract unless the mortgagor is a debtor or a guarantor under a related guarantee. In addition, any mortgage is void to the extent to which it secures an amount in excess of the sum of the amount of the liabilities of the debtor under the credit contract and reasonable enforcement expenses of enforcing the mortgage. The code specifically recognises all accounts mortgages, which, as members know, when properly used, can be of assistance in minimising stamp duty, registration fees and professional costs when entering into new mortgage arrangements.

In recent years there have been criticisms about the way in which certain banking institutions have misused guarantees. The code contains a number of provisions designed to ensure that persons wishing to guarantee the debt obligations of others are given key information up front and that credit providers cannot impose unreasonable obligations on guarantors. For example, a guarantor must receive a signed copy of the guarantee and a related credit contract within 14 days of execution. Moreover, before a guarantor's obligations under a credit contract are increased, the guarantor must receive written notice of the proposed changes; and, before they become binding, the guarantor must first accept them in writing.

I must draw your attention, Mr Speaker, to Part 4 of the code, which deals with changes to obligations under credit contracts, mortgages and guarantees and, in particular, to Division 3, which focuses on changes on grounds of hardship and unjust transactions. In relation to hardship, the code provides, as a general principle, that a debtor who is unable reasonably, because of illness, unemployment or other reasonable cause, to meet his or her obligations under a credit contract and who reasonably expects to be able to discharge his or her obligations if the terms of the contract are changed by either extension or postponement can apply to a credit provider for such a change. This facility does not apply where the credit provided exceeds $125,000.

The code also empowers the Credit Tribunal to reopen unjust transactions. A court may reopen a transaction if satisfied on the application of the debtor, mortgagor or guarantor that in the circumstances relating to the contract, mortgage or guarantee at the time the transaction was entered into or changed the transaction was unjust. The code sets out certain circumstances that the court can take into account in determining whether a transaction should be reopened, and I invite members to peruse subclause 70(2). The subclause outlines a number of factors to which the court may have regard. However, these are not intended to be exhaustive.

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