Our decision to hold our recent credit code reform seminars in 4 different cities in 4 days had one distinct advantage: the 3 key speakers were able to immerse ourselves in the topic and consider a range of questions without distraction.

Whilst we had workshopped and researched the topics in advance, nothing beats having to deal with "real life" questions from a range of interests.

This was our first national "roadshow" and the feedback was excellent.

Here we are on day 1 (Left to right: Jacobson, Dwyer and Adams):

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP,has announced updates on the implementation of the National Consumer Credit Protection Reform Package: a revised timetable and the release of draft regulations.

In so far as they impact ADI's (including credit unions and building societies) the main change is that the introduction of the changes to the existing credit code have been delayed from 1 January 2010 to 1 July 2010 to allow time for procedure, document and IT changes to be implemented.

UPDATE: Not all of the changes will be deferred to 1 July 2010, only those mentioned in the Minister's Press Release.

When the National Credit Code takes effect the changes will include:

• 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.

Otherwise there is no change to the existing registration and licensing timetable for the introduction of responsible lending for ADI's.

More here

The Commonwealth Bank has announced it will reduce dishonour fees from $35 on business and personal transaction accounts to $5, and overdraft fees from $30 to $10. It will also reduce the late payment fee on Home and Personal Loan accounts from $45 to $25.

It will not reduce exception fees on credit cards, instead it will introduce functionality next month that allows customers to put their own stop on transactions that will exceed their credit limit at the point of sale.

The fee changes will take effect on 1 October, 2009.

CommBank is the 3rd major bank to announce fee reductions. It is not clear whether they are in response to the unfair contract terms in the Australian Consumer Law, political pressure, consumer dissatisfaction, an improvement in profits or a combination of all.

In any case, there will be continuing pressure for the method of calculation of  default fees to be transparent.

Whilst the new National Consumer Credit Protection Bill seeks to define and mandate "responsible lending" the UK Office of Fair Trading (OFT) has issued a consultation on draft guidance setting out practices the OFT considers constitute irresponsible lending.

The guidance covers each stage of the lending process and a range of potential issues in a credit transaction including advertising, account management and handling of arrears.

The draft guidance identifies types of policies and procedures that the OFT would expect lenders to put into practice. These include:

• Ensuring all key information provided to prospective borrowers is clear and easily understandable and properly explained to them.
• Assessing a prospective borrower's ability, in the context of their overall financial circumstances, to afford to meet repayments in a sustainable manner.
• Dealing with borrowers in default or arrears in a fair and proportionate manner, seeking to repossess a borrower's property only as a last resort.

The document also sets out some specific practices that the OFT considers to constitute irresponsible lending. These include:

• Encouraging borrowers to increase existing debt when borrowers may face difficulties clearing their debts.
• Targeting specific groups of vulnerable borrowers with credit products that are likely to be inappropriate for them.
• Using high-pressure selling techniques or inappropriate inducements.

From 1 January 2011 the National Consumer Credit Protection Bill will prohibit loans which are unsuitable for consumers and specify the steps lenders need to take to verify information.

Whilst individual lenders will be able to determine their own credit policies, areas such as refinances and "low doc" loans will need particular attention.

Westpac has announced that from 1 October 2009, it will reduce all its "exception" fees to $9. This includes account overdrawn fees, outward dishonour fees and credit card missed payment and over the limit fees. This will apply to both personal and business customers.

This will put further pressure on CUBS competitiveness and margins.