What the National Credit Code leaves out

A schedule of exclusions

The purpose test decides most cases, but these exclusions sit beside it. All ten below come from the Code’s section 6, which is linked at the foot of this page.

1. 1

   Short-term credit within limits

   “This Code does not apply to the provision of credit if, under the contract: (a) the provision of credit is limited to a total period that does not exceed 62 days; and (b) the maximum amount of credit fees and charges that may be imposed or provided for does not exceed 5% of the amount of credit; and (c) the maximum amount of interest charges that may be imposed or provided for does not exceed an amount (calculated as if the Code applied to the contract) equal to the amount payable if the annual percentage rate were 24% per annum.” Not for a buy now pay later or low cost credit contract: see below.

   Section 6(1)

2. 2

   Credit with no prior agreement

   “This Code does not apply to the provision of credit if, before the credit was provided, there was no express agreement between the credit provider and the debtor for the provision of credit.” Not for a buy now pay later or low cost credit contract: see below.

   Section 6(4)

3. 3

   Continuing credit with only a fixed charge

   “This Code does not apply to the provision of credit under a continuing credit contract if the only charge that is or may be made for providing the credit is a periodic or other fixed charge that does not vary according to the amount of credit provided. However, this Code applies if the charge is of a nature prescribed by the regulations for the purposes of this subsection or if the charge exceeds the maximum charge (if any) so prescribed.” ASIC’s licensing guide, in its version updated in May 2025, gives that maximum as $200 in the first 12 months after the contract is made and $125 in any later 12 months, citing regulation 51 of the National Credit Regulations. Not for a buy now pay later or low cost credit contract: see below.

   Section 6(5); ASIC RG 203

4. 4

   The debit side of a mixed facility

   “This Code does not apply to any part of a credit contract under which both credit and debit facilities are available to the extent that the contract or any amount payable or other matter arising out of it relates only to the debit facility.”

   Section 6(6)

5. 5

   Bill facilities from a deposit-taking institution

   “This Code applies to the provision of credit arising out of a bill facility, that is, a facility under which the credit provider provides credit by accepting, drawing, discounting or endorsing a bill of exchange or promissory note. However, it does not apply if: (a) the credit is provided by an authorised deposit-taking institution (within the meaning of subsection 5(1) of the Banking Act 1959); or (b) the regulations provide that the Code does not apply to the provision of all or any credit arising out of such a facility.”

   Section 6(7)

6. 6

   Insurance premiums by instalments

   The Code does not apply to credit an insurer provides so that a premium can be paid to it by instalments, even where the instalments add up to more than the lump-sum premium, “if on cancellation the insured would have no liability to make further payments under the contract”.

   Section 6(8)

7. 7

   Pawnbroking, in part

   The Code does not apply to credit a pawnbroker provides on the security of pawned or pledged goods in the ordinary course of a lawfully conducted pawnbroking business, “as long as it is the case that, if the debtor is in default, the pawnbroker’s only recourse is against the goods provided as security for the provision of the credit”. The exclusion is partial: “However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.”

   Section 6(9)

8. 8

   Advances from a deceased estate, in part

   “This Code does not apply to the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate. However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.”

   Section 6(10)

9. 9

   Credit from an employer, in part

   This exclusion is partial: “This Code (other than this Part, Part 4, Division 3 of Part 5, Divisions 4 and 5 of Part 7 and Parts 12, 13 and 14) does not apply to the provision of credit by an employer, or a related body corporate within the meaning of the Corporations Act 2001 of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person).” So the parts it names still apply. And where a lender’s business is giving Code credit both to its employees or former employees and to others, the exclusion reaches only credit on terms more favourable to the borrower than those it gives people who are not its employees or former employees.

   Section 6(11)

10. 10

    Margin loans

    “This Code does not apply to the provision of credit by way of a margin loan (within the meaning of subsection 761EA(1) of the Corporations Act 2001).” ASIC’s responsible lending guide adds that the Corporations Act has a separate responsible lending obligation for margin loans.

    Section 6(12); ASIC RG 209.42

Exclusions made outside the Code’s text

Section 6 also lets the list grow without amending the Code. The regulations may exclude a class of credit they specify; ASIC may exclude a provision of credit it specifies; and ASIC may, by legislative instrument, exclude a class of credit specified in the instrument.

An exclusion that narrowed: buy now pay later

Exclusions can change. ASIC records that the National Credit Act was amended to extend the Code to buy now pay later contracts, by the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024. ASIC says that from 10 June 2025 “credit” takes in credit provided under buy now pay later contracts and under the new low cost credit contracts, and that anyone engaging in credit activities involving buy now pay later contracts must hold an Australian credit licence, with transitional arrangements for those whose applications ASIC had yet to decide.

Three details show how the line was moved. ASIC’s licensing guide notes that the first three exclusions above, short-term credit, credit with no prior agreement and continuing credit with only a fixed charge, do not apply to a low cost credit contract or a buy now pay later contract. The Code’s usual requirement that a charge is or may be made for the credit does not apply to buy now pay later contracts. And the exclusions made under sections 6(13), 6(14) and 6(17), the three powers above, do not apply to low cost credit contracts either, as section 13C provides.

When an exclusion stops applying

An exclusion is not fixed for the life of a contract. ASIC tells lenders that if an exclusion from the Code stops applying because the terms of an existing contract change, they should consider whether they need a licence before engaging in credit activities for that contract.

Exclusions sit beside the purpose test rather than replacing it. For the test itself, see personal or business purpose; for investment credit, where the margin loan belongs, see investment and the Code’s line.