Credit Reform

Keeping people out of unnecessary debt

I’ve seen too many cases of people being offered credit by financial institutions when they couldn’t afford to pay it back, leading to ever-increasing debt. It is time credit providers and lenders started behaving responsibly, which is what our consumer credit reforms are designed to accomplish.

The Gillard Government’s consumer credit reforms are significantly boosting consumer protection, cutting red tape for business and moving away from different consumer laws in each state to a national set of laws that will protect all Australians equally.

These reforms are vital for our 21st century national economy, and for continuing consumer confidence and protections in accessing credit, whether that is through a bank, a pay-day lender or a hire-purchase agreement. It is reform that has been badly neglected by previous governments but is all the more urgent in the face of the global financial crisis and cost-of-living pressures.

For the first time, credit lenders are required to lend responsibly, and for finance brokers and lenders to be licensed. All providers and brokers will also have to be members of an external dispute resolution scheme.  ASIC has become the sole, national regulator for consumer credit lending and finance broking.

We’re also moving to reduce predatory or undesirable lending practices by reviewing unsolicited credit card limit extension offers, examining interest rate caps on pay-day lending and possible regulation of reverse mortgages.

For more information about the Gillard Government’s consumer credit reforms, please visit http://www.treasury.gov.au/consumercredit/content/default.asp