National Credit Reform – two new bills expected by the end of April
Further to our update on 27 February 2009, Senator Nick Sherry has provided further information on proposed credit reforms in a speech given yesterday at the Institute of Actuaries of Australia Biennial Convention 2009.
Senator Sherry has confirmed that the new national consumer credit law to be administered by ASIC will establish a comprehensive national licensing regime. The regime will cover all credit providers, as well as credit and mortgage brokers and advisers.
By the end of this month, Senator Sherry expects to release the draft legislation for the new regime in the form of two draft bills and expects to introduce the National Consumer Credit Protection Bill and the Corporations Amendment Financial Services Modernisation Bill into Parliament by the middle of the year.
This first bill will contain the new national consumer credit code, which sets out the framework for the regime; responsible lending conduct provisions (which will include an assessment of the borrower’s capacity to repay the credit being offered); licensing of credit providers; and greater enforcement powers for ASIC to police the new regime.
Shortly afterwards, the Government expects to release the second bill. This will address margin lending, trustee companies and debentures.
At the request of the States and Territories, the government has agreed to defer full passage of both bills until September to allow the states to pass their relevant referral legislation in time.
Senator Sherry has indicated that licensing will start on 1 January 2010.
The next phase reforms is expected to be rolled out in 2010. During this phase, the government will consider possible further rules to stem specific unfavourable lending practices, including credit card limit extension offers, deceptive advertising practices and other fringe lending issues.
We will keep you posted with further developments.
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