New South Wales has amended the method of calculating the maximum interest rate for consumer credit contracts.  The changes are in the Credit (Commonwealth Powers) Bill 2010,  which has been passed by both houses of the New South Wales Parliament.

UPDATE: Act assented to on 23 March.

The new method requires the inclusion of the following fees or charges when calculating the maximum annual percentage rate under a credit contract:

• fees or charges payable by the debtor to any person for an introduction to the credit provider;
• fees or charges payable by the debtor to any person for any service if the person has been introduced to the debtor by the credit provider; and
• fees or charges payable by the debtor to the credit provider for any service relating to the provision of credit, other than a service referred to in the second point above.

This means that fees or charges payable to third parties such as broker fees for the introduction of credit will need to be included when calculating the maximum annual percentage rate.

The new method will take effect on commencement of the legislation, which is to be set by proclamation.

The legislation also includes a 12 month ‘sunset clause’ on the interest rate cap. Unless legislation is introduced to extend the life of the interest rate cap, it will therefore cease to apply 12 months after commencement of the legislation.

The amount of the maximum annual percentage rate continues to be 48%.