Australian Credit Reforms To Catch More Lenders

The Rudd Government has released its draft National Consumer Credit Protection reforms for public discussion. The new laws will transfer the regulation of consumer credit to the Commonwealth with ASIC becoming the national credit regulator.

Based substantially on the FSR regime style of licensing which has now been in place since 2001, the reforms extend the consumer credit protections to residential investment property and certain instalment contracts but overall do not significantly alter the nature of credit contracts caught by the consumer credit laws.

The most significant change to be introduced in the reforms is the extension of the consumer laws to credit service providers and to those who are acting on behalf of credit providers. Also of significance is the introduction of the responsible lending regime which will impact on the processes required in the pre-loan stage, and place onerous responsibilities on the credit providers and the providers of credit