Following the release of the Australian Government's
Financial Services and Credit Reform Green Paper in June 2008 and
agreement at the March and July 2008 Council of Australian
Governments (COAG) meetings to transfer consumer
credit regulation from the Australian States/Territories to the
Australian Commonwealth, a 2-stage plan was agreed by the Premiers
and Chief Ministers at the COAG meeting in Perth on 2 October
In a joint press release on 2 October 2008 by the Treasurer,
Wayne Swan and the Minister for Superannuation and Corporate Law,
Nick Sherry, it was revealed that the Government has a two-stage
plan for national consumer credit laws to be implemented over a
period of four years. The press release can be accessed at www.pm.gov.au/media/Release/2008/media_release_0514.cfm.
First phase of the plan
According to the press release, the first phase changes will be
dealt with in Commonwealth, State and Territory legislation by the
end of 2009, with a two-year transition period for effected
Under the first phase:
The Uniform Consumer Credit Code will be enacted as federal law
and extended to cover mortgages on investment properties
A national licensing scheme will be introduced (which will
cover all finance brokers, advisers and credit providers)
Payday lenders will come under the national licensing regime
which means payday lenders will need to lend responsibly, including
assessing a borrower's capacity to repay loans
Lenders will be licensed by the corporate watchdog, Australian
Securities and Investments Commission (ASIC) which
will be given extra powers to police the scheme
All borrowers will be able to appeal to an external dispute
resolution body to which all licensed lenders must belong
The Corporations Act 2001 (Cth) will be extended to cover
margin lending products, which will have to provide disclosure
statements similar to First Home Saver Accounts
The Commonwealth will be responsible for trustee
Second phase of the plan
The second phase changes will become Commonwealth legislation in
the first half of 2010.
Under the second phase:
Predatory lending practices such as a review of credit limit
extension offers, reviewing interest rate caps and other fringe
lending issues, will be looked at
Reverse mortgages will be dealt with to protect older
Australians considering using the equity in their homes to gain
access to credit.
What does this mean to you?
The proposed changes to the consumer credit laws may affect your
business. You should watch out for the proposed legislative
changes. We will be able to assist in making future submissions on
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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The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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