Published Thursday, 29 November, 2007 at 02:00 PM
Attorney-General and Minister for Justice and Minister Assisting the Premier in Western Queensland
The Honourable Kerry Shine
Better Protection for Credit Consumers
Consumers will be better protected under changes to the Uniform Consumer Credit Code which will prevent pay day lenders from bypassing Queensland’s planned 48% rate cap on loans, Attorney-General and Minister for Justice Kerry Shine announced today.
Mr Shine said Executive Council has approved amendments to the Code which will close a loophole which allowed credit providers in other states to bypass rate caps by using bill facilities.
“As Queensland is the lead jurisdiction for the Consumer Credit Code the effect of this regulation will automatically apply Australia wide,” Mr Shine said.
“The changes will better protect people who seek consumer credit from lenders on the fringe of the credit industry.”
The amendment to the Code follows Monday’s announcement by Premier Anna Bligh and Mr Shine that a 48% cap inclusive of interest, fees and charges will be introduced in Queensland.
“Some credit providers have used bill facilities, such as promissory notes or bills of exchange, to avoid complying with the Credit Code which provides protection for consumers,” Mr Shine said.
“These changes will mean that bill facilities will be covered by the Code and credit providers will no longer be able to provide bill facilities to avoid protections offered by the Code.
“The changes to the Credit Code follow a commitment by the Ministerial Council on Consumer Affairs to protect all Australians from unscrupulous lending practices.
“Fringe lenders who offer credit through bill facilities usually provide these loans to those who can least afford the excessive fees charged.
“Borrowers are often forced to borrow more to cover the debt, usually with high fees or charges.”
Mr Shine said there were serious penalties for any lenders who charged interest, fees and charges in excess of the 48% cap.
“Credit providers who charge above the legislated maximum will be required to pay back any amount over the cap and will face civil penalties of up to $500,000 for breaching the Consumer Credit Code.
“They will also face significant criminal penalties of $10,000 for individuals and $50,000 for corporations.”
For more information on managing credit, consumers can get a free copy of How to be Moneywise from www.fairtrading.qld.gov.au or phone 13 13 04.
Media contact: Troy Davies 3239 6400 or 0488 799 273
Mr Shine said Executive Council has approved amendments to the Code which will close a loophole which allowed credit providers in other states to bypass rate caps by using bill facilities.
“As Queensland is the lead jurisdiction for the Consumer Credit Code the effect of this regulation will automatically apply Australia wide,” Mr Shine said.
“The changes will better protect people who seek consumer credit from lenders on the fringe of the credit industry.”
The amendment to the Code follows Monday’s announcement by Premier Anna Bligh and Mr Shine that a 48% cap inclusive of interest, fees and charges will be introduced in Queensland.
“Some credit providers have used bill facilities, such as promissory notes or bills of exchange, to avoid complying with the Credit Code which provides protection for consumers,” Mr Shine said.
“These changes will mean that bill facilities will be covered by the Code and credit providers will no longer be able to provide bill facilities to avoid protections offered by the Code.
“The changes to the Credit Code follow a commitment by the Ministerial Council on Consumer Affairs to protect all Australians from unscrupulous lending practices.
“Fringe lenders who offer credit through bill facilities usually provide these loans to those who can least afford the excessive fees charged.
“Borrowers are often forced to borrow more to cover the debt, usually with high fees or charges.”
Mr Shine said there were serious penalties for any lenders who charged interest, fees and charges in excess of the 48% cap.
“Credit providers who charge above the legislated maximum will be required to pay back any amount over the cap and will face civil penalties of up to $500,000 for breaching the Consumer Credit Code.
“They will also face significant criminal penalties of $10,000 for individuals and $50,000 for corporations.”
For more information on managing credit, consumers can get a free copy of How to be Moneywise from www.fairtrading.qld.gov.au or phone 13 13 04.
Media contact: Troy Davies 3239 6400 or 0488 799 273