Media Release: OPTIONS TO HAUL IN CREDIT CARDS AND DEBT

FROM THE MINISTER FOR CONSUMER AFFAIRS

DATE: Thursday, March 2, 2006

OPTIONS TO HAUL IN CREDIT CARDS AND DEBT

The Minister for Consumer Affairs, Marsha Thomson, today released a landmark report outlining options for reforms to Victoria’s credit laws.

The report of the Consumer Credit Review, chaired by the Member for Monbulk, James Merlino, has been released for public feedback.

It calls for several changes, including ‘health’ warnings on credit card statements and a ban on pre-approved credit card increases.

The review was initiated by the Bracks Government as part of its social action plan A Fairer Victoria to encourage affordable credit to low-income households and prevent predatory finance practices that target disadvantaged households.

“With credit card debt in Australia reaching a staggering $34.2 billion dollars last year, many consumers are living well beyond their means,” Ms Thomson said.

“The report suggests we force lenders to outline to the ultimate cost if you only pay the minimum monthly payment by putting a ‘health’ warning at the bottom of a credit card statement.

“Another option is to ban unsolicited offers to increase your credit card limit where the new amount offered has been pre-approved, so consumers get an opportunity to think about how much credit they can really afford.

“The Bracks Government is not only concerned about the level of debt consumers are facing, but also about the predatory finance tactics of some lenders. The report puts forward a range of options to deal with these bad practices.”

The report’s options include:
· banning ‘blackmail’ securities, where lenders use consumers’ household goods as security for a loan;
· allowing consumers to dispute any unreasonable fees and charges, including establishment fees, ongoing fees and credit card penalty fees such as late payment fees;
· tightening the registration system for credit providers and forcing all lenders to be members of an approved alternative dispute resolution service;
· increasing the powers of the Government to prosecute dodgy credit providers; and
· stopping lenders from allowing consumers to go into ‘negative equity’ under reverse mortgages.

Ms Thomson said the Bracks Government encouraged public feedback on the report.

“The Government will carefully consider the report’s options and will release a final response later this year.”

For more information go to the Consumer Affairs Victoria website at http://www.consumer.vic.gov.au