Treasury has released for public consultation draft legislation to amend the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (the Enhancements Bill).

The Enhancements Bill was introduced into Parliament on 21 September 2010.

These amendments to the Enhancements Bill respond to recommendations contained in committee reports, and to other issues raised in consultations with stakeholders. (Background)

The amendments propose changes to:

• the regulation of reverse mortgages;
• hardship applications under the National Credit Code;
• arrangements regarding the caps on the maximum cost payable in respect of both small amount credit contracts and all other credit contracts;
• the prohibition on licensees using terms such as ‘pre-approved’; and
• changes to allow for the introduction of disclosure requirements in relation to the use of employer payment authorisations.

The Bill is scheduled to be debated in Parliament in the Winter 2012 sittings.

Separately, Treasury has released a Discussion Paper setting out a range of possible measures aimed at reducing the dependency of consumers on high-cost short-term small amount loans (“payday loans”), including by:

• minimising the use of these loans where other solutions to a consumer’s financial needs are available (for example, by negotiating directly with their utility provider, where the credit would otherwise be used to pay an electricity bill);
• encouraging the use of existing alternative forms of credit (such as no interest or low interest loan schemes); and
• promoting the availability of financial counselling services that can provide constructive and long-term solutions.