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The Statutory Right to Seek a Credit Contract Variation on the Grounds of Hardship: A History and Analysis

Federal Law Review, Vol. 44, No. 1, 2016, pp. 77-109

34 Pages Posted: 9 Jun 2016  

Paul Ali

University of Melbourne - Law School; Centre for International Finance and Regulation (CIFR)

Evgenia Bourova

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: June 9, 2016

Abstract

The authors focus on one of the most important statutory protections for Australian consumers in financial hardship: the right to seek a variation of a credit contract contained in s 72 of the National Credit Code. They provide a comprehensive history of this right, which has been part of Australian consumer credit law since the 1970s. Over the years, it has evolved from a very limited right to seek an extension of time to pay a debt on grounds of illness and unemployment, to a broader provision that requires credit providers to comply with a prescribed process before they can commence enforcement action against a consumer who has sought a variation to their payment arrangements. They also undertake an analysis of the evolution of this right to demonstrate that despite improved understandings of the causes of financial hardship, it continues to envisage a middle-class subject with a strong awareness of their rights, and excludes some particularly vulnerable consumers. This right is also representative of a regulatory approach that envisages a limited role for consumer credit law, and does not sufficiently address the imbalance of bargaining power between the consumer and the credit provider. The authors argue for the imposition of an obligation to provide a minimum range of hardship assistance directly upon credit providers, as a means of addressing this imbalance and ensuring more meaningful protection for consumers in financial hardship.

Suggested Citation

Ali, Paul and Bourova, Evgenia and Ramsay, Ian, The Statutory Right to Seek a Credit Contract Variation on the Grounds of Hardship: A History and Analysis (June 9, 2016). Federal Law Review, Vol. 44, No. 1, 2016, pp. 77-109. Available at SSRN: https://ssrn.com/abstract=2792532

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Evgenia Bourova

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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