Consumer credit goes Federal

Nick Sherry

The Commonwealth and the states and territories have agreed that the Commonwealth Government will take responsibility for the regulation of all consumer credit, Senator Nick Sherry announced yesterday.

The agreement, made at the Council of Australian Governments (COAG) meeting in Sydney, means that personal loans, credit cards, pay day lending and micro loans will be regulated Federally.

“Current consumer credit regulation is duplicated, patchy, very hard to change ... and does very little to protect Australians whilst imposing unnecessary red tape on business,” Senator Sherry said.

At the same time as the agreement was made, COAG also formally agreed that the Federal Government will assume responsibility for regulating mortgages, mortgage brokers, trustees companies, non-bank lenders and margin loans.

The Mortgage and Finance Association of Australia (MFAA) has welcomed the changes to the regulations.

“The original green paper put out by the Government seemed to suggest that the Federal Government would only take over some parts of the industry such as mortgage credit, and we argued that that would actually be worse — that we needed a consistent approach,” MFAA chief executive Phil Naylor told Money Management.

He added that the MFAA was happy that the Government had decided to change its approach.

“It means that the industry can be regulated by the one set of rules,” he said.