4/12/02
Changes to consumer credit laws, introduced to Parliament today by Consumer Protection Minister John Kobelke, will help consumers who are shopping around for personal and home loans.
In effect, credit providers will be required to simplify the total cost of a loan - including fees and charges - into a single percentage rate, therefore allowing consumers to compare 'like with like'.
Amendments in the Consumer Credit (Western Australia) Amendment Bill 2002 will introduce the mandatory requirements for comparison rates for fixed term credit.
"What consumers will now be able to do is compare 'apples with apples' on personal and housing loans," Mr Kobelke said.
"Presently it is confusing for consumers to juggle the information from competing lenders selling different products.
"Consumers have to decide which is better for them - a loan that has a variable rate, one with a special low introductory interest rate for the first 12 months, or one with a fixed term interest rate.
"The total cost of fees and charges payable on a loan can have a significant impact on the overall cost of the loan and is an important matter that consumers consider in making decisions when borrowing money."
Mr Kobelke said the introduction of mandatory comparison rate advertising requirements would apply to all fixed term credit offered by credit providers.
"These changes will strengthen the truth in lending objectives of the Consumer Credit Code by prescribing the manner in which credit providers can advertise their products," the Minister said.
The legislation will also enable the Department of Consumer and Employment Protection to take up to six years, instead of two, to begin civil penalties against credit providers breaching the Consumer Credit Code.
The Bill enables Western Australia to adopt the national Uniform Consumer Credit Code that exists throughout Australia as template legislation.
The Uniform Consumer Credit Code is a national scheme of credit laws introduced in 1996 to advance consumer protection, while at the same time ensuring that product diversity and competition is maintained.
Mr Kobelke said this meant each time the code was improved, WA would automatically pick up the changes through template legislation rather than having to introduce separate but consistent legislation.
This would remove delays in protection for WA consumers.
This new approach would:
- improve the capacity to respond quickly and uniformly to issues as they arose in the marketplace;
- reduce costs and duplication;
- enable WA to keep pace with future initiatives; and
- avoid considerable delays associated with having to introduce a separate amendment Bill each time the national code was amended.
Minister's office: 9222 9211
