The Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry has announced that the legislation for consumer credit reform will be passed by September with licensing to commence by 1 January 2010. Draft bills are now expected by the end of April with introduction into Parliament by mid-year.

The new regime will be implemented by two draft bills: the National Consumer Credit Protection Bill and the Corporations Amendment Financial Services Modernisation Bill.

The first bill will contain the new national consumer credit code, which sets 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.

The second Bill will address margin lending, trustee companies and debentures.

At the request of the States and Territories, the Commonwealth has agreed to defer full passage of both bills until September to allow the states to pass their relevant referral legislation in time.

The second phase will 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.