NO.077
JOINT MEDIA RELEASE
WITH
THE HON TONY ROBINSON MP
MINISTER FOR GAMING
MINISTER FOR CONSUMER AFFAIRS
MINISTER ASSISTING THE PREMIER ON VETERANS' AFFAIRS
Stronger standards for banks and financial institutions against
unfair lending practices are the key features of historic national
reforms to credit launched in Melbourne today.
The Commonwealth Minister for Financial Services, Superannuation and
Corporate Law, Chris Bowen, and Victorian Minister for Consumer Affairs,
Tony Robinson, launched the National Consumer Credit Code,
to improve consumer protection
in credit and loan transactions, make financial institutions more
responsible and to reduce red-tape for lenders and brokers.
The National Consumer
Credit Code improves consumer protection and fosters more prudent
lending conduct by introducing:
-
Responsible lending conduct requirements to ensure consumers are not
lured into credit contracts they cannot afford to repay;
-
Extended hardship criteria, boosting the availability of relief to
loans of up to $500,000;
-
Provisions to stop predatory lenders from exploitative practices
such as using household items as security for cash loans; and
-
A
single national licensing regime and consistent requirements across
Australia for lenders and brokers.
Mr Bowen said the national credit reform package will come into force
on 1 July 2010 replacing the State-and Territory-based credit laws that
had been in place since 1992.
"1 July 2010 marks a significant reform achievement and the
culmination of a practical co-operative partnership between all levels
of government, industry, consumer groups, policy makers and regulatory
authorities," Mr Bowen said.
"These important national credit reforms will provide greater
protection for Australian borrowers against unfair and predatory lending
practices.
"For lenders and brokers, a single national licensing regime and
uniform laws across all jurisdictions will reduce the regulatory burden.
"This is a significant step in our efforts towards a seamless
national economy."
Mr Robinson said the new national code would prevent financial
institutions from sending unsolicited offers to increase credit card
limits to customers they knew would find it difficult to manage a higher
limit.
"Using credit cards is very convenient for consumers, but there is
the real risk for some consumers of getting into unsustainable amounts
of debt," he said.
"The global financial crisis has been an important lesson for
financial institutions, regulators and governments about the importance
of more responsible lending practices.
"Ensuring lenders do not encourage customers to take on unsupportable
amounts of debt is a key consumer protection measure, allowing consumers
to enjoy the convenience of credit will reducing the risk of getting
into problematic amounts of debt."
Mr Robinson said Victoria had led the way on consumer protection in
credit transactions and was the first state to require credit providers
be members of an ASIC-approved dispute resolution scheme, as well as
introducing protections against unfair contract terms in credit
contracts.
The Brumby Labor Government also funds free financial counselling
services across the state, including the MoneyHelp program, a service
available to all Victorians who have lost their jobs, are working
reduced hours or who are at risk of unemployment.
This Government also provides access to affordable credit through the
No-Interest Loans Scheme for eligible low-income Victorians.
"Introducing prudent regulation of credit and providing consumers
with the information and support services they need to make sound
financial decision is the key to ensuring Australians manage debt," Mr
Robinson said.
For more information about the National Consumer Credit Code, go to www.treasury.gov.au/consumercredit or www.asic.gov.au/credit
28 June 2010