Flying under the radar, in late July 2020, the Electronic Transactions Regulations (Cth) 2020 repealed and replaced the Electronic Transactions Regulations (Cth) 2000 to extend the range of transactions to which the provisions of the Electronic Transactions Act 1999 (Cth) (Electronic Transactions Act) apply.
The number of exceptions to application of the Electronic Transactions Act which are contained in Schedule 1 of the Regulations has been reduced from 157 items to 93 items and the scope of some of the other exemptions has been narrowed.
Unlike the many temporary dispensations introduced by various states and territories in response to Coronavirus COVID-19, this change is permanent.
Notably, electronic communications under the National Consumer Credit Protection Act 2009 (National Credit Act) are facilitated by these changes.
Previously, where a credit provider wanted to communicate with a debtor and send documents electronically, the credit provider not only had to obtain the debtors consent, but also had to follow special rules and give specific notifications to debtors. In addition, communicating electronically was prohibited in certain situations – guarantees being a case in point.
The new regulations:
- remove the special and convoluted rules that applied the giving of consent by the recipient, and
- allow guarantees to be made and guarantor notices to be given electronically.
Both credit providers and credit assistants (as defined in the National Credit Act) can avail themselves of these changes. Existing consent forms used by credit providers will need to be changed.
To make it clear, consent still needs to be given by the debtor and a guarantor – but now it is just a “simple” consent that is required.
Additionally, under the new Regulations, not only can guarantees be made electronically, but:
- copies of the signed guarantee and credit contract may be given electronically (section 57(1)(a) and (b);
- guarantees may be extended to cover liability under future credit contracts electronically (section 59 (2)(a), and
- notice of a proposed further advance under a credit contract may be given to a guarantor (as a precursor to a guarantor agreeing to extend the guarantee to cover a further advance) (section 61 (1)(a).
However, the new Regulations still prohibit electronic communications in relation to default situations. In particular:
- notices of default under credit contracts and mortgages (section 88);
- giving notice of intent to enter residential property to take possession of goods (section 99(1)(b);
- requests for consent to enter premises to take possession of goods (regulation 87(a));
- giving consent to enter premises to take possession of goods (regulation 87(c));
- giving notice to debtor after taking possession of goods (section 102(1));
- giving notice to enforce judegment against linked credit provider (section 130(5(a), and 130(6)(a))
- giving notice to repossess goods under consumer lease (section 178)
Changes have also been made to a range of other legislation to permit electronic communications, including to the following financial services legislation:
- Banking Act 1959;
- Financial Transaction Reports Act 1988;
- Insurance Act 1973;
- Retirement Savings Accounts Act 1997, and
- Superannuation Industry (Supervision) Act 1993.
A minor referencing change has also been made to the Corporations Act 2001 which while of no practical relevance, may be confusing to the uninitiated!
Credit providers and credit assistants now need to review and change their documents and procedures.
It is hoped that the Federal Government will also look at enabling a greater range of electronic communications under the Corporations Act 2001 (Cth). The Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth) was a Federal Government’s response to the impacts of COVID-19. But this Determination is currently only temporary and ends in late March 2021. More permanent solutions for companies are well overdue.