Today, a package of reforms to improve credit card lending and marketing practices passed Federal Parliament. After a long consultation process, Consumer Action Law Centre is relieved to see the important reforms finally enacted.  

Consumer Action has seen the human impact of irresponsible lending and marketing by credit card providers for many years. The Centre recently told the Royal Commission into the finance sector that it is not uncommon for people to call its financial counselling service with credit card debts that exceed $100,000. The Centre has seen lenders fail to properly assess affordability, and bombard customers with unsolicited offers to increase credit card limits or balance transfer deals that are often unsuitable. Until now, it has also been very difficult to cancel a credit card or reduce a credit limit online.   

Today’s reforms will: 

  • require affordability assessments to be based on a person’s ability to repay the full credit limit, not just the minimum repayment amount;  
  • prohibit providers from making unsolicited credit limit offers in relation to credit card contracts; 
  • prohibit providers from retrospectively charging interest on credit card balances; and  
  • enable consumers to reduce credit card limits and cancel credit cards online. 

 While Consumer Action is very supportive of the reforms, CEO Gerard Brody says more needs to be done to hold lenders to account for irresponsible lending. 

“Today’s reforms are a welcome step in the right direction. However, we also need tougher penalties for lenders who break the law, and better compensation for people who have suffered harm because of irresponsible lending,’ said Mr Brody. 

‘The harm caused by unaffordable loans is enormous, and it is hurting everyday Australians and their families. Lenders should face serious consequences when they break responsible lending laws, so that there is an incentive for lenders to comply with their legal obligations. This should be a key area of focus for the Royal Commission.’ 

Consumer Action is available for comment on the reforms and Royal Commission. 

MEDIA CONTACT: Jonathan Brown, media@consumeraction.org.au, 0413 299 567 

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