Proposed Disclosure Changes For Credit Contracts Released

An explanatory package outlining proposals to streamline the disclosure of essential financial information to accompany credit contracts has been released for public consultation. Submissions on the package close on 31 March 2006.

Background

The package of materials contains amendments which flow from the Post Implementation Review (PIR) undertaken on the operation of the Consumer Credit Code (Code). The PIR revealed that, in respect of disclosure of key features of the proposed contract to assist consumers in ascertaining the cost of credit, there were three issues pf concern in relation to existing disclosure requirements—namely, timing, complexity and comparability.

It was also noted in the PIR that the application of key disclosure requirements encouraged 'over compliance', resulting in excessive documentation (which, in turn, acts against the principle of providing clear and comparable information).