Published Thursday, 31 July, 2008 at 02:53 PM
Attorney-General and Minister for Justice and Minister Assisting the Premier in Western Queensland
The Honourable Kerry Shine
Shine Condemns Harsh Lender Practices
Attorney-General and Minister for Justice Kerry Shine said some credit lenders are already resorting to untruths in a bid to avoid Queensland’s 48% interest rate cap on loans, which came into effect today.
“My office has already heard a story of one lender advising a borrower they could not redraw on their existing loans because the State Government will issue the lender with a fine of up to $500,000 for doing so. This is misleading,” Mr Shine said.
“Lenders are choosing not to alter the terms of an existing contract because they know any change could subject that contract to the 48% cap on interest, fees and charges, rather than the excessive interest currently being charged.
“We introduced laws which may require an existing contract to be subject to the 48% rate cap if the conditions of that contract are changed.
“This is designed to help vulnerable consumers get off the credit merry-go-round faster.
“Unfortunately it appears lenders are willing to provide false information to borrowers to avoid having credit contracts come under the new cap.”
“Borrowers should be aware there is no Government law preventing lenders agreeing to a change of terms on a credit contract and lenders are only refusing to do so to avoid the new rate cap.”
Mr Shine said borrowers do have other avenues to try and alter the terms of a loan on the grounds of hardship if a lender refuses to do so.
“Legal Aid Queensland can help you change your loan when you can't keep up with repayments, they can also check if your loan complies with the law and advise you on your options so you can get back on track financially.”
“The Queensland Government has given additional funding to Legal Aid Queensland to make hardship applications to the court on behalf of borrowers.”
Consumers who are struggling to repay personal or household loans can get free legal information and advice by calling Legal Aid Queensland on 1300 65 11 88 (cost of a local call).
For more information on the 48 per cent cap and alternatives to high-cost credit, visit www.justice.qld.gov.au or phone 13 13 04.
Media Contact: Troy Davies 3239 6400 or 0488 799 273
“My office has already heard a story of one lender advising a borrower they could not redraw on their existing loans because the State Government will issue the lender with a fine of up to $500,000 for doing so. This is misleading,” Mr Shine said.
“Lenders are choosing not to alter the terms of an existing contract because they know any change could subject that contract to the 48% cap on interest, fees and charges, rather than the excessive interest currently being charged.
“We introduced laws which may require an existing contract to be subject to the 48% rate cap if the conditions of that contract are changed.
“This is designed to help vulnerable consumers get off the credit merry-go-round faster.
“Unfortunately it appears lenders are willing to provide false information to borrowers to avoid having credit contracts come under the new cap.”
“Borrowers should be aware there is no Government law preventing lenders agreeing to a change of terms on a credit contract and lenders are only refusing to do so to avoid the new rate cap.”
Mr Shine said borrowers do have other avenues to try and alter the terms of a loan on the grounds of hardship if a lender refuses to do so.
“Legal Aid Queensland can help you change your loan when you can't keep up with repayments, they can also check if your loan complies with the law and advise you on your options so you can get back on track financially.”
“The Queensland Government has given additional funding to Legal Aid Queensland to make hardship applications to the court on behalf of borrowers.”
Consumers who are struggling to repay personal or household loans can get free legal information and advice by calling Legal Aid Queensland on 1300 65 11 88 (cost of a local call).
For more information on the 48 per cent cap and alternatives to high-cost credit, visit www.justice.qld.gov.au or phone 13 13 04.
Media Contact: Troy Davies 3239 6400 or 0488 799 273