Govt committed on consumer credit uniformity

The Minister for Superannuation and Corporate Law, Senator Nick Sherry, has restated the Federal Government’s commitment to implementing national consistent consumer credit law in circumstances where he does not want to see an Australian equivalent of the sub-prime crisis.

Addressing the Mortgage and Finance Association of Australia today, Sherry pointed out that household debt as a share of disposable income had more than doubled over the past decade to around 160 per cent and that while households had generally been coping with higher debt servicing costs, this was a product of the standards expected within the Australian market.

“But we must not forget the lessons of the recent US experience with widespread mis-selling of high loan-to-value ratios and lax mortgage underwriting standards,” the minister said.

“We must always remember that higher debt makes households more vulnerable to the unexpected. This is a particular concern in our more difficult economic environment,” Sherry said.

He said this was why the Government was improving the current regulatory system for credit and making it consistent across the nation.

Sherry said that while the overwhelming majority of mortgage brokers and lenders were acting in the best interests of the borrowers they were sourcing loans for, there would always be shonky operators.

He said that in addition to the Government’s work on national consistent consumer credit laws, it was also working to minimise shady practices.