Focus: Credit Card Reforms
Services: Financial Services

Credit Card Reforms

The Regulations for the upcoming Credit Card reforms have been finalised in anticipation of the 1 July 2012 implementation date.

The Regulations amend the existing National Consumer Credit Protection Regulations and support the reforms introduced earlier this year through the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act (Credit Cards Act).

For credit providers there will be significant implementation and ongoing costs and operational requirements involved with the reforms. In addition, a failure by a credit provider to comply with the requirements of the Credit Cards Act carries both civil and criminal penalties.

The key target areas of the reforms identified in the Regulations:

  • prescribe the Key Facts Sheet for credit card application forms and the circumstances in which an application form may include an out-of-date Key Facts Sheet
  • refine the definition of credit limit increase invitations
  • introduce a requirement for credit providers to notify consumers when their account has exceeded its credit limit
  • define requirements for the giving and withdrawal of consents and agreements made under the Credit Cards Act, and
  • require lenders to inform consumers about the implications of only making minimum repayments through a personalised minimum repayment warning on monthly statements.

Issues which have identified by industry as needing further clarification following the release of the Regulations include:

  • whether consumer consents to receive credit limit increase invitations can be bundled with other consents such as privacy and electronic communication consents
  • the timing around when the credit provider becomes aware of accounts exceeding their credit limit.

The requirement to provide Key Facts Sheets will only apply to new credit cards applied for from 1 July 2012. However, the requirement to provide the Minimum Repayment Warning on monthly statements will apply for both new and existing cards.

The warning and details will need to appear on the statements in the following form:

Minimum Repayment Warning: If you make only the minimum payment each month, you will pay more interest and it will take you longer to pay off your balance. For example:

If you make no additional charges using this card and each month you pay ... You will pay off the Closing Balance shown on this statement in about ... And you will end up paying an estimated total of ...
Only the minimum payment [period] [total interest 1]
[repayment 2] 2 years [total interest 2], a saving of [saving 2]

Having trouble making repayments? If you are having difficulty making credit card repayments, please contact us on [phone number]. We may be able to assist you.

DibbsBarker has a dedicated financial services team who know the sector well, with particular legal expertise in credit law and business banking. Our team are recognised for their creative approach to finance and banking issues, combining proven technical expertise with sound commercial acumen.

Our recent work for a number of clients in assisting with the licensing and compliance obligations arising out of the NCCP Reforms means the team at DibbsBarker is well placed to provide you with any assistance or advice you require regarding the Credit Card reforms or the NCCP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.