Page 2825 - Week 10 - Tuesday, 13 September 1994
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This Bill widens the scope of the Credit Act. At the present time, credit contracts where the interest rate is greater than 14 per cent and the value of the contract is less than $20,000 are covered by the Credit Act. That obviously is out of date. We would all know that these days interest rates fortunately tend to be lower than 14 per cent and, particularly for purchases like cars and so on, the amount of credit usually being obtained is certainly in excess of $20,000. The idea of the legislation, therefore, is to bring more kinds of consumer contracts within the scope of the legislation. I note, however, that this will now be done by regulation, and it is proposed that the regulation will provide that the Act covers contracts where the interest rate is greater than 8 per cent and where the amount to be borrowed is less than $30,000.
There is one other provision at least foreshadowed in the Minister's presentation speech which I could not find in the legislation itself; that is, there would be a general cap on interest rates of 30 per cent. I understand that the Minister has acknowledged that there was an omission in the Bill itself. I thought of speaking to the Consumer Affairs Bureau about false advertising but decided that probably they would feel somewhat inhibited in dealing with - - -
Mrs Carnell: He might be only the second-best consumer affairs Minister.
MR HUMPHRIES: Indeed. I know that, for the best consumer affairs Minister in the country, that must be a slight problem - having falsely advertised what his own legislation is going to do - but I am sure that we can forgive him on this one occasion.
The other thing which the Bill does is to set up a financial counselling trust fund. This fund has the object of receiving moneys which are payable on breaches of the Act itself and is designed to be used for credit counselling, for credit and debt education, for research - I am not sure what the research would be into - for something called consumer credit litigation and for other matters as well. These are, I think, valuable activities; but I do have some questions about who will administer these moneys, and particularly whether it would be the intention of the Government to have the Minister directed by, say, the Consumer Affairs Bureau or whether bodies like CARE, for example, because of their credit and debt counselling, would have some role in conducting this consumer credit and debt education and possibly the research that is referred to in this Bill.
The money that I have referred to there is to be available by virtue of the Credit Tribunal finding that there has been a contravention of the Act. In those circumstances, rather than the tribunal ordering the refunding to the particular debtors of the moneys or charges illegally collected from them, it might order that the collection of those moneys that were illegally collected not be reversed and indeed continue but that a penalty should be paid into the trust fund. It will be interesting to see how this will work. You can assume that this would occur in a situation where a particular credit provider might have many thousands, tens of thousands, of customers, all of whom it might have overcharged a certain minor percentage or nominal amount, and in which circumstance it is highly impractical to actually calculate it and refund them all a very small amount of money.
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