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Connexus : Issue 36
"While Abacus and its members strongly support a rigorous regulatory environment for credit, we also support the provision of fair and reasonably priced credit to consumers. Our concern is that the proposals outlined in the draft bill will limit the latter without supporting the former. They will also disproportionately affect smaller ADIs who have the strongest track record of responsible lending in personal credit markets," Abacus said in its submission to Treasury on the draft bill. "Our members do not have the scale of our larger listed competitors to absorb new costs. We have limited capacity to 'wear' new risks such as the extensive criminal sanctions imposed in this bill." The AFC said "enactment of the reforms as currently drafted will necessitate compliance infrastructure that will include system, process and documentation changes with the attendant costs; which may be reflected in product pricing going for ward and consequently borne by all customers." The ABA said elements of the bill could have "nonsensical" consequences. Abacus was concerned that the election promise to prohibit pre- approved credit limit increase offers had appeared in the draft bill as a ban on such invitations. "As Treasury is aware, an offer is a general contract law concept with a relatively clear and defined meaning," our submission said. "Notwithstanding the government's election commitment, the provision as drafted is applied to the much more nebulous concept of an invitation, expansively defined." The final version of the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011 introduced into Parliament on 24 March contained some improvements on the draft bill. However, considerable uncertainty remains for credit card providers because elements of the reform package are to be introduced through regulations that have not yet been released. -- Luke Lawler is senior adviser, policy and public affairs, Abacus. NEWS connexus www.abacus.org.au 13 "[The reforms] will disproportionately affect smaller institutions such as credit unions and mutual building societies." Promises made Labor's pre-election 'Fairer, Simpler Banking' policy committed the government to these measures: • Consumers not being charged over-limit fees unless they had specifically agreed their accounts could go over limit. • Credit card providers allocating payments to higher interest debts first. • Interest charges being applied consistently under an industry-agreed standard, including when interest starts to accrue and on what balances. • The prohibiting of unsolicited credit limit extension offers unless the consumer had agreed to the service. • Consumers being given more say in nominating their own credit limit, subject to responsible lending obligations. • Credit card application forms including a clear summary of key account features. • Consumers being informed about the implications of making only minimum repayments on their credit cards. Events April 29 April--1 May Vic/Tas Insight Seminar, Ballarat, Vic May 4 May Abacus Chairs' & CEOs' Forum, Brighton-le-Sands, NSW 4-5 May BSA Annual Conference, Birmingham, UK 10 May Abacus Fraud and Financial Crimes Symposium, Sydney July 6-7 July Banktech Summit 2011, Sydney 24-27 July World Credit Union Conference, Glasgow, Scotland August 30 August Abacus Chairs' & CEOs' Forum, Sydney October 20 October International Credit Union Day 22-26 October 2011 Abacus Convention, Cairns, Qld November 30 November- 2 December Chief Financial Officers' & Financial Managers' Forum, TBA, Vic