Tis the season for commitments as the ten largest credit providers operating in Australia have promised to change their practices in relation to credit card lending.
“ASIC expects that all credit card lenders will address the issues raised in our review,” ASIC Commissioner Sean Hughes said. “We will be monitoring lenders over the next two years to make sure they have taken action to address our concerns and to ensure that consumer outcomes are improving in the credit card market.”
Earlier this week the Australian Securities and Investments Commission (ASIC) released their Credit Card Lending In Australia Update 604.
This is just five months after a report was released in July which found that almost the 550, 000 people found were found to be arrears and the 930, 000 people were found to be in persistent debt.
The then ASIC deputy chairman, Peter Kell, said that “Only a handful of credit providers take proactive steps to address persistent debt, low repayments or poorly-suited products. There are a number of failures by lenders to act in the interests of consumers and we expect them to respond swiftly to our findings. We will be following up to ensure the problems we have identified are addressed, including public updates later this year.”
Around that same time, the regulator released a consultation paper that would work towards preventing consumers from ending in what the regulator defines as unsuitable credit card contracts and also ensuring that consumers have ‘reasonable access’ to credit through credit card contracts.
Changes in Report
Changes that have been highlighted in the recently released report are that the credit providers are:
taking ‘proactive measures’ with communications to help consumers with credit card debt.
Consumers will not be able to exceed 10 per cent of their limit
A ‘fairer’ approach to balance transfers
‘enhancing’ disclosures around cancelling credit cards
In the report, the corporate regulator also reminds regulated-entities to consider these changes in the context of the incoming intervention powers.