Applicability of This Part

### Applicability of This Part

**93.** If you are an individual who provides a guarantee and/or indemnity to secure a loan we grant to another individual or small business, and this Code applies to the loan, then this section of the Code applies to your guarantee and/or indemnity.

### Limiting Liability Under the Guarantee

#### Before Accepting a Guarantee

**94.** Your guarantee will be restricted to:

a) A specific amount and/or category of amounts, such as all amounts due under a particular loan, plus other liabilities and amounts as outlined in the guarantee (e.g., interest and recovery costs); or

b) The value of specified property or other assets under a particular mortgage or other security at the time of recovery.

#### During the Guarantee

**95.** You may write to us to limit, or further limit, the liabilities you have guaranteed. However, we are not obliged to accept your request if:

a) The limit you request does not cover the borrower's existing liability (plus any interest, fees, or charges we may incur regarding that liability) under the relevant loan contract at the time;

b) We are required to make further advances to the borrower; or

c) We would be unable to maintain the current value of an asset securing the loan without making further advances.

### Information We Will Provide You

#### Before Accepting a Guarantee

**Notice to You**

**96.** The terms and conditions of the guarantee will include a prominent notice that:

a) You should seek independent legal and financial advice;

b) You can refuse to sign the guarantee;

c) There are financial risks involved;

d) You can limit your liability in accordance with this Code or as permitted by law;

e) You can request information about the transaction or loan; and

f) If applicable, the guarantee may cover future credit facilities and variations of the existing loan.

**97.** We will inform you:

a) About any notice of demand we have issued to the borrower for the guaranteed loan, or any loan the borrower has (or has had) with us, within the previous two years; and

b) If any existing loan we have provided to the borrower will be canceled if the guarantee is not given. This does not apply if you are a commercial asset financing guarantor, sole director guarantor, or trustee guarantor.

**Required Warning Notice**

**98.** We will ensure a warning notice appears directly above where you sign the guarantee. The warning notice will be substantially in the form required by section 55 of the National Credit Code, and detailed in Form 8 of the National Consumer Credit Protection Regulations 2010, consistent with this Code.

**Guarantee Documents**

**99.** We will provide you with copies of the following documents related to the borrower:

a) The proposed loan contract;

b) A list of any related security contracts;

c) Any related credit report from a credit reporting body;

d) Any current credit-related insurance contract in our possession;

e) Any financial accounts or statement of financial position the borrower has provided us in the previous two years for the purposes of the guaranteed loan;

f) The latest statement of account relating to the loan for a period in which a notice of demand was made by us within the last two years; and

g) Other information we have about the guaranteed loan that you reasonably request — but we do not have to provide our internal opinions. This does not apply if you are a commercial asset financing guarantor, sole director guarantor, or trustee guarantor.

**What We Will Tell You If You Are a Director Guarantor**

**100.** If you are a director guarantor (other than a sole director guarantor), we will inform you that you have the right to receive the documents in paragraphs 96 to 99, and that these documents contain important information that may affect your decision to provide a guarantee. You may choose not to receive some or all of the documents, and we will not influence your choice.

#### During the Guarantee

**101.** We will provide you with the following information about a borrower's deteriorating financial position related to the loan you guarantee, within 14 days of the relevant event:

a) A copy of any formal demand or default notice we send to the borrower after we send it;

b) A written notice if the borrower has informed us they are experiencing financial difficulty, resulting in a change to their loan; and

c) A written notice if the borrower is in continuing default for more than two months after the issuance of the default notice mentioned above.

**102.** If you request, we will provide additional copies of any information we have given you within 30 days.

**103.** However, we do not need to provide those copies if we have given you the requested information within three months before your request. Paragraphs 101, 102, and 103 do not apply if you are a commercial asset financing guarantor, sole director guarantor, or trustee guarantor.

### Extending Your Guarantee

**104.** If a borrower obtains a new loan or changes are made to an existing loan, these may be covered by your guarantee to the extent they fall within the limit of your guarantee.

**105.** If we agree to increase the limit of your guarantee, we will:

a) Provide you with the documents required under paragraph 99; and

b) Obtain your written acceptance of the extension of the guarantee.

**106.** In these circumstances, we will provide you with any unsatisfied notice of demand made by us on the borrower regarding the loan.

### Signing Your Guarantee

#### When We Can Accept Your Guarantee

**107.** We will not accept a guarantee from you until the third day after you have been given the information provided in paragraphs 96 to 99.

**108.** However, we can accept the guarantee earlier if you:

a) Have obtained independent legal advice about the guarantee;

b) Have accepted an extension of the guarantee;

c) Are a commercial asset financing guarantor, sole director guarantor, trustee guarantor, or vehicle asset financing guarantor; or

d) Are a director guarantor and choose to sign and deliver the guarantee earlier. We will not influence your choice.

**Signing Your Guarantee**

**109.** We will provide the guarantee documents directly to you or your representative. We will not give the guarantee documents to the borrower or someone acting on behalf of the borrower to arrange for you to sign the guarantee.

**110.** If we attend the signing of the guarantee, we will ensure you sign the guarantee in the absence of the borrower. Paragraphs 109 and 110 do not apply if you are a commercial asset financing guarantor, sole director guarantor, or trustee guarantor.

### Withdrawing or Ending Your Guarantee

#### Withdrawing Your Guarantee

**111.** You may, by written notice to us, withdraw from the guarantees:

a) At any time before we provide credit under the relevant loan; or

b) After credit is first provided, if the signed version of the relevant loan differs materially from the proposed loan we gave you before you signed the guarantee. This does not apply to any change to the loan described in paragraph 104. However, you may do so only to the extent of the obligations under the guarantee.

#### Ending Your Guarantee

**112.** You may end your liability under a guarantee you have given us by:

a) Paying us the lower of:

i. The borrower's outstanding liability, including any future or contingent liability; or

ii. The amount to which your guarantee of the borrower's liability is limited under the guarantee; or

b) Making other arrangements we agree to in return for releasing you from your guarantee.

### Enforcing Our Rights Under the Guarantee

#### How We Will Enforce Our Rights Under the Guarantee

**113.** We will not enforce any mortgage or other security you have provided in connection with the guarantee unless we have first enforced any mortgage or other security the borrower has provided for the guaranteed liability. This does not apply where the guaranteed liability arises under a standard margin loan.

**114.** We will not enforce any judgment against you under the guarantee unless:

a) We have first enforced any mortgage or other security the borrower has provided for the guaranteed liability; and

b) One (or more) of the following has occurred:

i. We have obtained a court judgment in our favor against the borrower for payment of the guaranteed liability, and the judgment debt remains unpaid for at least 30 days after our written demand for its payment;

ii. We have made reasonable attempts to locate the borrower without success; or

iii. The borrower is insolvent.

**115.** However, the restrictions under paragraphs 113 and 114:

a) Do not apply if you have specifically agreed in writing after the default notice is issued, and we have informed you of the limitations of our enforcement rights under this chapter that they do not apply; or

b) Do not require us to first enforce any mortgage or other security the borrower has provided if we reasonably expect that the net proceeds of that enforcement will not be sufficient to repay a substantial portion of the guaranteed liability, or because the borrower has not provided us with information, documents, or access to premises or assets as required, we are unable to reasonably assess whether the net proceeds of that enforcement will not be sufficient to repay a substantial portion of the guaranteed liability.