New national consumer Credit laws, which include tougher penalties for dodgy lenders, are being introduced by the federal government.

Financial Services Minister Chris Bowen says the measure will make it less likely that families who can’t meet their debts will lose their homes.

Mr Bowen told parliament on Thursday the measures will replace the present state-based system of consumer credit protection, which operates inconsistently across the eight jurisdictions.

“As well as making the consumer credit system fairer, more consistent and more workable, the new regime will significantly improve the effectiveness of protection for consumers,” he said.

“It will also address many of the regulatory gaps that have plagued the state system.”

A national licensing system for everyone involved in consumer credit, to be run by the Australian Securities and Investment Commission (ASIC), will be set up.

To qualify for a credit licence, lenders and brokers must meet training requirements, have adequate financial and staff resources, meet enhanced standards of conduct and be part of a dispute resolution scheme which borrowers can use without cost.

ASIC will have the power to cancel a licence, which will ban the person from engaging in credit activities anywhere in Australia.

Mr Bowen said meeting responsible lending obligations would be a key licence condition.

Lenders and brokers had to make reasonable inquiries to assess a potential borrower’s capacity to repay the loan.

Borrowers had to be made aware of their right to request a variation to their credit contract if they suffered financial hardship.

“Additional measures have been included to help protect consumers’ family home by requiring more rigorous assessment of any credit offer that will require the consumer to sell their home in order to meet the obligations of that contract,” Mr Bowen said.

ASIC’s enforcement powers will be strengthened, with criminal penalties of up to two years jail for those breaching responsible lending requirements.

Civil penalties for licence misconduct will be up to $220,000 for an individual and $1.1 million for a corporation.

Mr Bowen said borrowers could have disputes resolved more quickly and cheaply through dispute resolution scheme.

 

First Home Buyers Grant Passes Legislation - AAP Lending Central 25/06/09

Fears NSW first home buyers could miss out on federal government grants have been allayed, with state government legislation to administer the payments being passed on Wednesday.

NSW Treasurer Eric Roozendaal had warned that federal payments of up to $14,000 for first home buyers purchasing a new property and $7,000 for an existing home were at risk because the state opposition planned to vote against the enabling legislation in the lower house.

The opposition said it voted against the bill because other sections of the legislation contained a host of unpopular measures, including a duty on the transfer of businesses.

With the NSW government not holding a majority in the state upper house, it called on the opposition to support the bill, so that first home buyers wouldn’t miss out on receiving their grants.

Although the opposition voted against the bill in the Legislative Council, the government won minor party support, allowing it to pass.

Passage of the bill came on the same day that Premier Nathan Rees announced a record number of first home buyers had taken up government grants and cuts to stamp duty in May.

The grants can be worth up to $24,000 for new homes, once federal and state grants are added together.

About 7,300 first home buyers took advantage of both federal and state grants and stamp duty cuts, worth around $178 million, last month.

It was the third record month of first home buyers in a row, with more than 21,000 first home buyers taking up the offers of federal and state grants in that time, Mr Rees said.

“We’re getting more young families into their first homes than ever before and helping them get on with establishing their lives,” he said.

The biggest number of grants were handed out for properties bought in Sydney’s western suburbs, Mr Rees said.