What is the NCCP Act?

The National Consumer Credit Protection Act 2009, or the NCCP Act, is legislation that’s designed to protect consumers and ensure ethical and professional standards in the finance industry.

Lenders and mortgage brokers must hold a credit licence or be registered as an authorised credit representative and must adhere to the rules set out in the NCCP.

The NCCP Act is regulated and enforced by ASIC in accordance with the National Credit Code (NCC).

Which loans are regulated?

As a general rule, almost all home loan types and applications are regulated under the Act.

The rules for this are complicated, however, a loan is likely to be regulated if it meets the following conditions:

  • The borrower is a natural person; and
  • A charge is made for providing the credit; and
  • The credit provider provides the credit in the course of a business.
  • The credit is provided wholly or predominately;

    • For personal, domestic or household purposes; or
    • To purchase, renovate or improve residential property for investment purposes; or
    • To refinance credit that’s been provided wholly or predominately to purchase, renovate or improve residential property for investment purposes.

This means that most standard home loans are regulated under the NCCP Act.

Search the NCCP Act legislation to learn more

You can search the NCCP Act online for terms which will give you more understanding of your consumer rights and the obligations of your mortgage broker to act in your best interests:

You can also refer to RG 209 Credit licensing: Responsible lending conduct for information about what is expected from mortgage brokers and lenders.

Which loans are unregulated?

There are exceptions that aren’t regulated by the NCCP Act. Home loans that are unregulated include:

  • Loans in the name of a company (i.e. not to a “natural person”); or
  • Loans used predominantly to invest in commercial property, shares or a business.

There may be more flexible lending products available for these loan types, where no form of income verification is required. These are known as no doc loans.

The process of applying for a home loan

When you apply for a loan with a mortgage broker, they’ll follow the specific process that has been set out in the Act.

  1. Make enquiries: Your mortgage brokers must make reasonable enquiries as to your financial position, requirements & objectives.
  2. Verification: Your mortgage broker must take reasonable steps to verify your financial position.
  3. Preliminary assessment: With the information gathered from steps one and two, your broker must make a preliminary assessment as to which loan(s) are appropriate for you, before recommending them to you.

The lender is required to make a final assessment using a similar process to mortgage brokers. They don’t normally provide this assessment to you as part of their process. However, you can request a copy by contacting your bank.

What does ‘not unsuitable’ mean?

Your mortgage broker and lender are required by the NCCP act to provide you with a loan that isn’t unsuitable.

ASIC deems a loan to be not unsuitable if:

  • It meets your requirements and objectives, and
  • You have the ability to repay the loan without experiencing substantial hardship.

Examples of your requirements might be a fixed interest rate or an interest only period. Your objectives might be to buy a home or borrow enough money to consolidate your debts.

The lender’s borrowing power calculator (serviceability calculator) will assess your ability to repay the debt without hardship.

The term “not unsuitable” was chosen because this puts the responsibility onto the customer to prove that the loan was unsuitable rather than onto the lender to prove that the loan was suitable.

Can’t you just tell me which lender is best?

We frequently receive requests from people who want to know which lender they should apply with and what interest rate they’ll receive, before we have gone through the first two steps properly!

It simply isn’t possible for us to recommend a lender, without knowing your full situation and seeing your supporting documents. Without this information, we can’t give you accurate information.

Additionally, it’s against the NCCP Act for us to recommend a product without making proper enquiries and verifying your information.

There are literally hundreds of different credit policies which could potentially affect the outcome of your application, many of which are counter intuitive or have very little to do with common sense!

Imagine a builder trying to give you a quote to build a house, without actually seeing the plans. Applying for a home loan is a complicated process and if we don’t complete a preliminary assessment then you risk having your loan declined or we may recommend an unsuitable loan.

Can you give me an indicative interest rate?

Yes, we can give you an indicative interest rate and the details of likely lender fees. We normally give you a range, as we can’t confirm immediately which lenders you’ll qualify for a mortgage with.

What does this mean for low doc loans?

Lenders and mortgage brokers are required to take reasonable steps to verify your financial position. This is at odds with the concept of a low doc loan where you don’t need to provide evidence of your income. To get around this problem, lenders have come up with “alternative verification” methods.

By providing some documents as evidence of your income, lenders can fulfil their obligations under the NCCP Act, without requiring your tax returns and financial statements.

The most common documents that lenders ask for are:

  • BAS statements: A lender may ask for 12 months’ BAS statements to verify your turnover and estimate your income.
  • Trading statements: A lender may ask for 6 months bank account statements from your business, to verify your turnover and estimate your income.
  • Accountant’s letter: A lender may have a specific accountant’s letter template for your accountant to sign, confirming your income.

The old style low doc loans, where only an income declaration was required, are effectively gone. The only exceptions to this are the unregulated mortgages available from specialist lenders.

Do no doc loans still exist?

No doc loans don’t require any evidence of your income and, in some cases, don’t require you to sign an income declaration. They don’t meet the requirements of the NCCP Act and as such, are only available from a few select lenders who offer unregulated loans.

For your loan to be unregulated, it must be either:

  • For investment in commercial real estate,
  • For investment in shares,
  • For investment in a business, or
  • In the name of a company / trust structure.

If your loan is regulated under the NCCP act then you can’t apply for a no doc loan. You must meet the above criteria or one that’s likely to be unregulated and then you can qualify for a no doc loan.

Please note that the interest rates and fees for no doc loans are significantly higher than those of normal mortgages.

Customer feedback

We’re committed to complying with all regulatory legislation and we endeavour to find our customers the best loan product available. We appreciate any comments, compliments or complaints you may have that can help us improve our processes.

Please contact us on 1300 889 743 and direct your feedback as follows:

  • Direct compliance or NCCP queries as well as compliments or complaints, to our Compliance Manager.
  • Direct operational or process queries to our Operations Manager.

Find out more

If you’d like to learn more about the NCCP Act and how it’ll affect your home loan application, please call 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will get back to you within 24 hours.

  • Theresa

    Does the investment home loan of a trust falls under the jurisdiction of the NCCP Act?

  • Hi Theresa, home loans for both owner occupied and investment properties lies in the scope of NCCP Act.

  • Hungerford

    What’s the main difference between NCCP regulated and unregulated loans?

  • Hello Hungerford,

    Basically, NCCP regulated loans will be looking out for the customers as per the NCCP Act so there’s some level of protection. However, NCCP unregulated loans don’t need to follow the act so can basically have any rates and any requirements, meaning for example – no real income evidence, high interest rates, etc, and so are usually assessed on a case by case basis.

  • Whelan

    The term on my home loan will extend a bit further than when I’m planning on retiring and I was told by my bank manager that it wouldn’t meet NCCP regulations so that can be a problem. What else can I do?

  • Hey Whelan,

    If the loan term extends past your likely retirement age, then this does mean that the bank will not be meeting their responsible lending obligations under the NCCP act. However, the NCCP Act is open to interpretation so each bank has their own requirements and rules for older borrowers. You can check out the retirement age home loan page for more info:

  • Bubble Boy

    I am confused by an argument on Australian Property Forum where a guy there says banks can’t foreclose a regulated loan for any other default then failure to make repayments on time. He says this includes defaults for fraudulent representations, fall in value of security, being a terrorist or their supporter etc

    He has a blog here, and dozens of people say on line that he is correct.

    Is any of this true or correct?

  • Hi Bubble Boy,

    I haven’t researched this extensively however I am not aware of any clauses in the NCCP act. The part of the NCCP act quoted there is referring to putting someone into a loan where the primary method of repayment is via selling the property. I’m assuming the original intention was for someone to pay the loan off over 30 years, however due to a contract breach the bank has requested accelerated repayment (immediate payment of the debt).

    Most loan contracts have a clause that the bank can call in the debt at any time, if an event of default occurs and is not rectified. The example Westpac contract clearly states this for both regulated and unregulated loans.

    Where there is fraud it is likely that a banks will demand repayment of the loan within 30 days (if their contract allows them to do so), put the loan into default immediately, blacklist the customer in a database shared by all lenders and will consider referring to the police depending on the nature of the problem.

    Where a property has fallen in value it is unlikely that the bank will call in an existing loan. This is not normally an event that triggers the loan to be in default. For commercial loans OR foreign currency loans this is an event of default.

    P.s. Please do not consider a career as a terrorist. Their incomes are rarely sufficient to help them to buy more investment properties.

  • Tru

    Hi, what’s the status of no doc loans with non-bank lenders?

  • After the sub-prime crisis, policy has tightened for no doc loans. Some lenders require that borrowers have an ABN for at least one year, and other lenders such as Citibank have increased the rates of their current no doc customers. No doc loans are still available for up to 70% of the property value, but at much higher rates.

  • Shashika Samarakoon

    What is the meaning of preparing NCCP documents in a finance mortgage company? Which kind of documents?

  • Hi
    Likely that would be the privacy form, fact find, credit guide, credit quote and preliminary assessment. It may vary depending on the brokerage e.g. some have additional documents or dont provide a credit quote.

  • Mathery

    Could somebody explain to me what is the primary difference between a regulated and unregulated loan?

  • Hi Mathery,
    Firstly, the National Consumer Credit Protection Act 2009 (NCCP Act) is the legislation that governs mortgage brokers and is designed to protect consumers and ensure ethical and professional standards in the finance industry. In a nutshell, regulated loans were designed to provide protection to consumers buying residential properties. Whereas, unregulated loans are those that do not have consumer protection under the NCCP Act. These mortgages are for the purposes of non-residential property finance such as for the purchase of commercial properties or for business purposes like a business line of credit (LoC). Hope this resolved your query :)

  • Williame

    I was reading about no-doc loans and found out that these loans aren’t covered by the act. I was wondering whether the NCCP Act stipulates that consumers must pay off their debt by a certain age?

  • Hi Williame,
    The National Consumer Credit Protection (NCCP) Act requires a lender to make sure that a borrower can repay a loan without significant hardship. It doesn’t mention a specific age. We’ve seen people over the age of 50 obtain a 30-year loan because they were well-off and had income from investments. However, most standard home loans are regulated under the NCCP Act. If you’d like to learn more about the NCCP Act and how it’ll affect your home loan application, please call 1300 889 743 or fill in our free assessment form https://www.homeloanexperts.com.au/free-quote/.