Consumer credit protection reform on the way?
June 26, 2009
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen has introduced new national consumer credit laws into Parliament.
The regime will establish, for the first time in Australia, a single, standard, national law for the regulation of consumer credit.
“The new regime will provide better protection for all Australians and assist with market confidence for the ongoing stability of the consumer credit sector,” Mr Bowen claimed.
“The package of reforms will see consumers and industry benefit through robust licensing regime- that will exclude the unscrupulous and incompetent from the industry.”
The reforms are, however, unlikely to be enforced until 2011 - which has disappointed the Consumer Credit Legal Centre.
“We have been waiting for this since at least 2003 for comprehensive regulation of (mortgage) brokers,” Karen Cox told Fairfax newspapers. “Now we’re being told we’re not going to have anything until January 2011.”
“What it says to me about the brokers in particular, it’s an absolute free-for-all for predatory lending for a year.”
Providers of credit and credit related services will be world leading as a result of the rigorous entry conditions required for an Australian credit licence and the requirement to meet responsible lending standards when providing credit or credit assistance, according to the Federal Government.
The Federal Government argues that phase one of the new national regime will include:
* a national licensing regime regulating credit providers and providers of credit related services enforced by the Australian Securities Commission (ASIC) as the sole regulator;
* world-leading responsible lending requirements;
* significant reduction in red-tape for Australian businesses in the credit industry;
* low cost, easy access dispute resolution mechanisms for consumers;
* new consumer redress options;
* protections for investment property loans;
* numerous enhancements to the State-based Uniform Consumer Credit Code Code (UCCC); and
* an increase to the threshold for hardship claims.
The package of consumer credit reforms will be available at www.treasury.gov.au/consumercredit.