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 News | August 21, 2008 |
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Feds to take over credit oversight
THE FEDERAL Government has proposed wide-ranging reforms that will transfer most regulation of credit providers to the Commonwealth.
Credit-related financial services are covered by a combination of national, state and self-regulatory regimes, and some investment activities, such as the credit component of margin lending, are not regulated under any specific legislation.
The paper envisages either regulating margin loans under chapter 7 of the Corporations Act or developing a separate Commonwealth regime for margin loans.
Non-deposit-taking lenders are regulated under the Uniform Consumer Credit Code, but the Green paper said reform to this code was often overly slow and complex because it required agreement from all states and territories.
However, one option envisages the states and territories still having jurisdiction over all credit outside mortgages and margin lending.
It is not self-evident that smaller loans such as personal loans are best regulated through a single national regime, the green paper states.
The use of credit facilities such as credit cards or payday loans may be affected by regional differences, which may need to be accounted for in the regulatory regime applying to these products.
For example, it said, NSW, Victoria and the ACT had interest rate caps, and the ACT had its own special credit card regulations.
Credit union and building society peak body Abacus said that the Commonwealth should regulate all credit products.
We urge the Government to go further and apply the same principles to all credit products not just mortgages, said Abacus CEO Louise Petschler. A uniform and consistent framework that covers all lenders and protects all borrowers should be the aim, she said.
The paper also proposes the Commonwealth take over regulation of all trustee corporations, under the jurisdiction of either the Australian Securities and Investments Commission or the Australian Prudential Regulation Authority.
Among other things, it said, this would reduce the regulatory burden on business by rationalising the reporting and accountability requirements for trustee corporations.
See: www.treasury.gov.au/documents/1381/PDF/Green_Paper_on_Financial_Services_and_Credit_Reform.pdf
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19 June 2008
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