The Council of Australian Governments (COAG) has reached an agreement with the Commonwealth Government for it to assume responsibility for the regulation of all consumer credit, Minister for Superannuation and Corporate Law Senator Nick Sherry said.
"We will introduce a regulatory structure for the 21st century, one which includes simple, standard national regulation, replacing regulation in six states and two territories," Sherry said.
COAG has also formally agreed that the Australian Government will assume responsibility for regulating mortgages, mortgage brokers, trustees companies, non-bank lenders and margin loans.
"National consumer credit regulation will close loopholes that have existed in various State and Territory jurisdictions and have allowed unscrupulous credit providers at the fringe end of the market to take advantage of people in desperate circumstances," he said.
The agreement was formalised at a COAG meeting held in Sydney yesterday.
During the coming months, the Commonwealth Government, in consultation with the States and Territories, will develop a plan to present to COAG before the end of 2008 on how this major agreement will be implemented.
"The States and Territories have done a worthy job up to now. The reality is that financial products have developed to a point where we now need national consumer protections and clear rules for businesses," Sherry said.
In March, COAG requested that the case for reform of consumer credit be further examined. In response to this, the Government released a Green Paper on Financial Services and Credit Reform in early June. Targeted consultations with the States and Territories and the business and consumer sectors established the case for quick action to transfer regulation of all consumer credit to the national level.
Consumer credit includes personal loans, credit cards, pay day lending and micro loans.
