Reference no: EM132774984

Question - On 1 May 2019, Sally attends a meeting with Tom, a loan officer at the Aussie Bank Ltd. Sally is self-employed and runs her own e-commerce business. Business is good and she thinks it is time to buy a small apartment and live in Clayton. Sally needs a home loan of $300,000; as Tom is impressed by Sally's business, Tom guarantees without reservation that he will get the loan approved. However, no disclosure documents have been provided to Sally.Sally and Tom discuss Sally's income generated from her business. During the discussion, Sally states that she is earning $5,000/per month from a seven-month contract with a major local school. Sally started her business in January 2019 after working in the education industry and advises Tom that her clients include major universities in Australia. Later, Sally provides records of her credit card debt of $1,100 and a personal loan of $2,000 that she repaid at the end of 2018. However, Sally never discloses her marital status: Sally and her husband divorced in April 2017, and Sally pays $1,000/per month to her ex-husband for child maintenance payments for their seven-year-old son. Although Sally was unclear about some of the key information regarding her financial situation, Tom did not think that is an issue.

On 1 July 2019, Aussie Bank Pty Ltd enters a loan agreement with Sally for $300,000 with a variable interest rate of 5 percent. The settlement for the Clayton apartment is on 31 July 2019 and this is when Sally receives the credit. Aussie Bank Pty Ltd registers its mortgage on 22 September 2019. In 2020, Minu, the manager of Aussie Bank Pty Ltd, is reviewing home loans for the past year and noted that Sally defaulted on her repayments. Minu raised the concern that in entering the contract with Sally, Aussie Bank Pty Ltd may have breached its obligations under the National Consumer Credit Protection laws.

Advise Sally about the following:

a) Whether National Consumer Credit Protection Act (NCCPA)/National Credit Code (NCC) provisions are applicable in the given case scenario.

b) Whether the responsible lending obligations under the NCCPA have been complied with while entering the loan agreement.

c) Whether disclosure obligations/truth in lending obligations under the NCC have been complied with while entering into the loan agreement.

d) Sally's right to financial hardship relief under the National Credit Code.