As part of an ongoing review of the fringe credit industry, the Ministerial Council on Consumer Affairs has invited comments on the exposure drafts of the Consumer Credit Code Amendment Bill 2007 and Consumer Credit Amendment Regulation 2007.

The Bill and Regulations affect fringe credit providers, such as payday lenders, who typically offer short term loans (from four weeks to 18 months) for small amounts (averaging less than $300), particularly to people unable to access credit from the mainstream lenders.

The purpose of the Consumer Credit Code Amendment Bill 2007 and Consumer Credit Amendment Regulation 2007 is to implement the recommendations contained in the Fringe Credit Providers – Decision Making Regulatory Impact Statement. Although the amendments will apply to all credit providers, they particularly target practices which are considered unjust and exploitative.

The proposals include:

• An amendment to prohibit credit providers from asking or taking security over essential
  household goods
• An amendment to require consumers to be given information about direct debit
  authorities
• Amendments to remove the presumption that applies to a Business Purpose Declaration
  and to encourage credit providers to ascertain the purpose of the loan
• An amendment to clarify that the pawnbroker exemption only applies where money is
  lent on the security of pledges of goods and the sole recourse provided for failure to repay
  the loan is for the pawnbroker to sell or otherwise dispose of the goods pledged
• For the purposes of determining the amount of credit fees and
  charges that are imposed or provided under s 7(1)(b) of the Code, a fee or charge is to
  include any fee paid to another party for referral to or from the credit provider
  irrespective of whether the party is related to the credit provider
• permit Government Consumer Agencies to make applications under ss 70 and 72 of
  the Code