What is a small amount credit contract?

A SACC is a consumer loan that fits the thresholds for amount and term set in the National Credit Code: think a few hundred dollars repaid over a few weeks, a same-day payday advance or some point-of-sale short-term loans. Because these loans are small and quick, the cost is expressed as flat fees rather than an annual rate, and the law caps those fees: an establishment fee cap on setting up the loan and a monthly fee cap while it is outstanding.

The caps limit the effective cost of short-term borrowing and the profit margins that create debt spirals. Providers must apply them correctly, pro-rate fees when a loan is repaid early and not disguise charges in add-on products. The Code that defines a SACC also caps its fees, and it is Schedule 1 to the NCCP Act, which carries the extra conduct rules. If the borrower defaults, the total the lender can recover is capped at double the amount borrowed. Moneysmart publishes the current figures.

SACC providers carry the general responsible lending obligations plus extra duties specific to short-term credit, set out in the NCCP Act itself. Before entering the contract they must assess whether it is unsuitable, which means verifying income, living expenses, other debts and the purpose of the loan, and documenting the decision. The test is objective: reasonable steps to verify, and a written record of why the loan was not unsuitable. That documentation is decisive if ASIC or AFCA later reviews the file.

Pre-contract disclosure must be given before the consumer is bound, showing fees, the total amount payable and what happens on default. Providers must not engage in unconscionable or misleading conduct, face restrictions on certain add-on fees and collection tactics, and owe extra care to vulnerable consumers. Regulators also scrutinise portfolios with high levels of consecutive SACCs, because structured rollovers designed to keep a consumer borrowing are prohibited and each new contract needs a fresh suitability check.

If you hold a SACC, you are entitled to written pre-contract disclosure of total cost, fees and a repayment schedule, and the lender must not have entered the contract if it was unsuitable for you. If you are struggling, you can ask for a hardship variation, and the provider must follow the contract and the law on default; harassment and unlawful collection are prohibited.

ASIC has strong supervisory and enforcement powers under the NCCP Act. Its compliance reviews of SACC providers have found poor suitability checks, inadequate documentation and fees applied incorrectly, leading to remediation, compensation and heightened supervision. Civil penalties, infringement notices, enforceable undertakings and disqualification are available in serious cases. For an individual dispute, lodge an internal complaint first, then go to AFCA, which has ordered providers to refund fees or vary contracts; report suspected systemic breaches to ASIC.