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Queensland consults on consumer credit interest rate cap legislation
The Queensland Attorney-General and Minister for Justice, Kerry Shine has released exposure drafts of the Consumer Credit (Queensland) Amendment Bill 2008 (pdf) and the Consumer Credit (Queensland) Special Provisions Regulation 2008 (pdf).
The Bill will introduce the concept of a maximum annual percentage rate for consumer credit contracts. The Regulation prescribes a 48 per cent per annum annual percentage rate cap on consumer loans (based on interest rates, fees and charges). Credit fees or charges arising from the establishment or maintenance of a temporary credit facility by an ADI will not be included in the calculation.
There are currently no caps on interest rates in Queensland and lenders can charge high interest rates, fees and charges on loans.
The Queensland Government is seeking industry and community comment in relation to the draft bill that will amend the Consumer Credit (Queensland ) Act 1994 and accompanying regulation.
Credit providers who charge above the legislated maximum will be required to pay back any amount over the cap and will face civil penalties of up to $500,000 for breaching the Consumer Credit Code. They will also face criminal penalties of $10,000 for individuals and $50,000 for corporations.
The closing date for submissions is 15 February 2008.
November 27, 2007 in Financial Services | Permalink
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Comments
Hello,
As far as I was aware the interest cap included All fee's and charges including any set up fee's.
Is an ADI an "Australian Deposit taking Institution"? Eg Mainstream Banking organisations...
Posted by: Dan Simmons | Dec 9, 2007 9:07:08 AM
Draft regulation 2(3) states:
"For calculating the annual percentage rate, not only interest charges but all credit fees and charges under the credit contract are to be included."
Bur draft regulation 2(4) then goes on to provide an exception for fees on temporary credit facilities related to an existing loan (eg overdrafts and short-term credit extensions) charged by ADI's (ie banks, building societies, credit unions) as follows:
"Reg 2(4) Despite subsection (3), any credit fees or charges arising from the establishment or maintenance of a temporary credit facility are not required to be included for calculating the annual percentage rate if—
(a) the credit provider is an authorised deposit-taking institution; and
(b) the debtor has or had an existing credit contract or debit account with the authorised deposit-taking institution at
the time the temporary credit facility is or was established; and
(c) the temporary credit facility is related to the existing credit contract or debit account.
(5) In this section—
temporary credit facility includes, but is not limited to, an overdraft facility and a short term extension of the total
amount of credit available under an existing credit contract."
Posted by: David Jacobson | Dec 9, 2007 10:23:41 AM
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