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October 27, 2009

Bills update

The following bills were passed by the Senate on 26 October 2009:

  • National Consumer Credit Protection Bill 2009 –56 Government amendments agreed to. The House of Representatives will now consider the amendments made by the Senate.
  • National Consumer Credit Protection (Fees) Bill 2009 :This bill will now be assented to.
  • National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009 –43 Government amendments agreed to. The House of Representatives will now consider the amendments made by the Senate.

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Posted 27th October 2009 by David Jacobson in legislation

October 21, 2009

UK responsible lending developments

The UK Financial Services Authority (FSA) has published proposals for reforms in the UK mortgage market which are relevant to our proposed responsible lending laws.

The review’s key features of the proposals, published in the mortgage market review discussion paper, are:

•Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay;
•Banning ‘self-cert’ mortgages through required verification of borrowers’ income;
•Banning the sale of products which contain certain ‘toxic combinations’ of characteristics that put borrowers at risk;
•Banning arrears charges when a borrower is already repaying and ensuring firms do not profit from people in arrears;
•Requiring all mortgage advisers to be personally accountable to the FSA;
•Calling for the FSA’s scope to cover buy-to-let and all lending secured on a home.

In particular the paper proposes making the lender ultimately responsible in every sale for verifying affordability. It also proposes that in each case a lender should assess the consumer’s ability to repay, i.e. calculate the free disposable income a consumer has to pay for the mortgage. Verification of income would be required for all mortgage applications.

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Posted 21st October 2009 by David Jacobson in legislation

October 14, 2009

Credit reporting proposals released

As part of its response to a recent Privacy Review Report the Government has released details of its proposals to improve individual credit assessments, complimenting the Government’s introduction of responsible lending laws.

The Government response agrees that the Privacy Act should permit credit reporting information to include the following categories of personal information, in addition to those currently permitted in credit information files under the Privacy Act:
(a) the type of each credit account opened (for example, mortgage, personal loan, credit card);
(b) the date on which each credit account was opened;
(c) the current limit of each open credit account; and
(d) the date on which each credit account was closed.

These changes will be subject to sufficient privacy protections being put in place.

The Government will also consult on a new credit reporting code.

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Posted 14th October 2009 by David Jacobson in legislation

October 12, 2009

Tasmania is first State to refer consumer credit powers to Commonwealth

The National Consumer Credit Protection Reform package is dependent on the States referring their powers to the Commonwealth under the COAG agreement which established the package.

Tasmania became the first State to introduce the required legislation into its Parliament on 7 October (see the Commonwealth (Credit Powers) Bill.)

The other states will make similar referrals in coming months.

UPDATE: The Credit (Commonwealth Powers) Act 2009 (Tas) was assented to on 12 November 2009.

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Posted 12th October 2009 by David Jacobson in legislation

October 6, 2009

Langes Compliance Assurance meeting 7 October 2009

LCAP members can download information here (password protected).

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Posted 6th October 2009 by David Jacobson in legislation

October 4, 2009

ASIC confirms credit reform timetable changes

ASIC has confirmed that changes or additions to State Code requirements regarding the following will commence on 1 July 2010 (not 1 January 2011):

  • application to credit for residential investment properties;
  • introduction of debit default notices;
  • amendments to business purpose declarations;
  • amendments to default notices; and
  • new notices in response to application for hardship variations and postponements.

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Posted 4th October 2009 by David Jacobson in legislation