Treasury Laws Amendment (Acquisition as Consumer Financial Thresholds) Regulations 2020

The Treasury Laws Amendment (Acquisition as Consumer Financial Thresholds) Regulations 2020 (the 2020 Regulations) are a set of amendments to the Australian Treasury Laws that modify the definition of consumer for the purposes of certain financial product thresholds. They form part of the broader Treasury Laws Amendment (2020 Measures) Act 2020 and were introduced to align Australian financial regulation with contemporary market practices and to protect consumers from predatory lending and unfair acquisition arrangements.

Why the Amendments Were Required

Prior to 2020, the thresholds used to determine whether a transaction fell under consumer protection provisions were set at levels that no longer reflected the realities of modern finance. Rapid growth in fintech, banking innovation, and the increasing use of smallvalue credit products meant many arrangements escaped consumer safeguards simply because they were below the old thresholds. The 2020 Regulations sought to:

• Raise consumer protection coverage to include more lowvalue credit and loan products.
• Reduce regulatory arbitrage where businesses segmented products to stay just under the threshold.
• Provide clearer guidance to entities offering financial products about when consumer law applies.

Key Changes Introduced

1. Revised Financial Thresholds

The Regulations increased several monetary thresholds:

• Credit contracts: The threshold for a credit contract to be classified as a consumer credit contract was reduced from $100,000 to $75,000.
• Leases and hirepurchase agreements: The threshold was lowered from $20,000 to $15,000.
• Insurance contracts: The limit for a consumer insurance contract was changed from $30,000 to $25,000.

These reductions broaden the range of products that trigger the consumer protection regime, ensuring that borrowers with smaller loans still benefit from unfair contract term protections and disclosure requirements.

2. Expansion of Acquisition as a Consumer Concept

The amendments clarify that a person who acquires a financial product, even if the acquisition is indirect (e.g., through an intermediary or as part of a bundled service), is treated as a consumer where the underlying thresholds are met. This prevents providers from sidestepping consumer safeguards by structuring deals through third parties.

3. Strengthened Disclosure Obligations

Providers must now give clearer, more detailed information on:

• Interest rates, fees and charges, including any variable components.
• The total cost of credit, expressed as an annual percentage rate (APR).
• Rights to early repayment and any associated penalties.

These disclosures must be provided in a standardised format before the contract is signed, and they must be retained for at least seven years.

4. Enhanced Enforcement Powers

The Australian Securities & Investments Commission (ASIC) received additional powers to:

• Issue infringement notices for noncompliance with the new thresholds.
• Require providers to amend or terminate contracts that were entered into under misleading or unfair terms.
• Seek civil penalties up to 5% of a companys annual turnover for serious breaches.

Impact on Different Stakeholders

Consumers

Consumers benefit from greater protection on a broader range of financial products. The lowered thresholds mean that many smallbusiness loans, paydaystyle credit, and shortterm leases now fall under the unfair contract term provisions of the Australian Consumer Law (ACL). Consumers also enjoy clearer precontract information, reducing the risk of hidden fees.

Financial Service Providers

Providers must review their product catalogues to determine whether each offering now qualifies as a consumer product. This may involve:

• Redrafting contracts to incorporate the new disclosure requirements.
• Updating pricing structures to ensure compliance with the APR calculation rules.
• Implementing training programs for staff on the changed thresholds and consumer rights.

Failure to adapt could result in enforcement action, financial penalties, and reputational damage.

Legal and Compliance Professionals

Legal counsel and compliance officers need to conduct a gap analysis across all financing arrangements. Practical steps include:

• Mapping existing contracts against the new $75,000 and $15,000 thresholds.
• Identifying any acquisition through a third party scenarios that now fall within the consumer definition.
• Preparing remediation plans for contracts that are noncompliant, such as offering to renegotiate terms or providing additional disclosures.

Implementation Timeline

The Regulations came into effect on 1 July 2020. However, ASIC allowed a transitional period for certain obligations:

• Disclosure updates: Required by 1 January 2021.
• Contract amendments for existing agreements: Must be completed by 1 July 2021, unless a hardship variation is applicable.
• Reporting obligations: Ongoing, with annual compliance statements due by 30 June each year.

Compliance Checklist

1. Identify all credit, lease, hirepurchase, and insurance contracts with values above the new thresholds.
2. Determine whether any acquisition was indirect and assess if the consumer definition now applies.
3. Update contract templates to reflect the required disclosures (APR, fees, early repayment rights).
4. Train staff on the revised thresholds and the importance of clear precontract communication.
5. Set up monitoring processes to flag new contracts that may fall under the consumer regime.
6. Prepare a remediation strategy for legacy contracts that are now noncompliant.
7. Maintain records of all disclosures and communications for at least seven years.

Further Resources

• ASIC Official Guidance on the 2020 Regulations
• Full Text of the Treasury Laws Amendment (Acquisition as Consumer Financial Thresholds) Regulations 2020
• Financial Consumer Agency Consumer Credit Information

This overview is intended for general informational purposes and does not constitute legal advice. Entities should seek professional counsel to assess how the Regulations affect their specific operations.