The Council of Australian Governments ("COAG")
yesterday agreed that the Federal Government would assume
responsibility for regulation of all consumer credit. This
closes the debate as to whether federal regulation in the area
would be limited to mortgage lending and related matters. The
decision was made two days after submissions closed in relation
to the Green Paper issued by Treasury in June where federal
regulation of all consumer credit was raised as an option.
Consumer credit includes personal loans, credit cards, payday
lending and micro loans.
Nick Sherry, Minister for Superannuation and Corporate Law,
in announcing this decision described the current consumer
credit regulation as "duplicated, patchy, very hard to
change or even non-existent" which "does very little
to protect Australians, whilst imposing unnecessary red tape on
business". He indicated that the new regulatory structure
would include "simple, standard national regulation,
replacing regulation in 6 states and 2 territories".
The Business Regulation and Competition Working Group of
COAG is to report to COAG in October 2008 with a detailed
We understand that over the next few months, consideration
will be given as to which of the following broad approaches to
including consumer credit regulation within the framework
of the existing financial services regulation under the
Corporations Act; or
regulating consumer credit consistently with its current
regulation under the Uniform Consumer Credit Code but with
changes aimed making the nature of this regulation and, in
particular, disclosures more simplified and meaningful.
However, irrespective of the approach that is adopted, it
seems clear that all credit providers will be required to be
subject to an Alternative Dispute Resolution Scheme.
Additionally, COAG agreed that the Federal Government would
assume responsibility for regulating mortgage broking, trustee
companies, non bank lenders and margin loans. No details of how
this regulation would work were released, but various proposals
were canvassed in the June Treasury Green Paper.
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.
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