It was a sunny day in May 2022, and John, a freelance graphic designer, had decided to take a big step and purchase his apartment. He headed to the lending company hoping to secure a home loan from his friend, Sarah, who worked as a loan officer at ABC, a non-ADI lending company. ABC operated under the Australia Credit License (ACL), meaning they had certain obligations under the National Consumer Credit Protection Act (NCCPA).

1. John was keen to get a home loan of A$500,000 at a fixed interest rate of 5% p.a. Sarah asked John a few questions about his financial situation. Sarah noticed from their conversation that John used several credit cards and had a personal loan with another bank, but she did not conduct a thorough assessment due to their long-standing friendship. She assured John straightaway that he would get the loan soon. A week later, on May 8th, John returned to ABC and signed the loan contract. After returning home, John found some financial documents related to his business that he had forgotten to give to Sarah, including a record of his income for the past six months, his latest credit card statement showing a balance of A$15,000, and documentation for a personal loan of A$50,000 that he had taken out from Oz Bank to buy new equipment for his business. John had only repaid $5,000 of the personal loan.

Using $450,000 of the loan, John purchased an apartment in his favorite suburb; the remaining $50,000 was used to upgrade his home office equipment. John started making the monthly loan repayments on time, but a few months later, he lost several major clients because of the economic downturn, and his income decreased significantly. Despite his best efforts, John could not keep up with his loan repayments and eventually defaulted on the loan. John also noticed that he was not given any disclosure documents regarding this loan, as he was looking for more information about the consequences of the default.

Please discuss whether ABC has breached any obligations under the NCCPA.

2. Sarah offered him a Small Dollar Loan (SDL) to help him overcome his financial difficulties. However, there were some fees associated with the loan that needed to be examined. The SDL had a duration between 16 days to 300 days, with a maximum credit amount of A$1,500 (total amount paid in a lump sum). It charged an establishment fee of A$400 and monthly account-keeping fees of A$50, as per Sarah.

Please discuss if these fees are permitted under NCCPA/NCC.