Legislative Assembly for the ACT: 2002 Week 10 Hansard (29 August) . . Page.. 3084 ..
MR STANHOPE (continuing):
need to assess this information and decide whether or not a borrower has the capacity to repay the amount of credit proposed before offering or extending the limits of credit.
The bill provides guidance for financial institutions as to how the assessment process must be conducted. It will put a stop to the practice of some credit providers offering credit and granting increases in consumer credit limits without fully assessing whether the debtor can repay the debt.
The bill will help prevent vulnerable consumers from obtaining unmanageable credit. It will protect them from being subjected to aggressive marketing of credit, causing real hardship in many cases.
Ms Tucker's bill strengthens the existing burden implicit in section 70 of the consumer credit code already requiring credit providers to make a reasonable assessment of a debtor's capacity to pay back a loan without substantial hardship. The code already provides a civil remedy under the harsh and unconscionable provisions of the code where a credit provider has not made a proper assessment of a borrower's capacity to repay.
Ms Tucker's bill will address a serious issue in consumer protection. Once the bill is passed, ACT lending institutions will be required to undertake a satisfactory assessment of a borrower's capacity to repay an amount of credit on offer, but it will also mean that the execution of a satisfactory assessment process has become an integral part of the lending process. A credit provider who fails to comply with these requirements may be subject to the criminal penalty provisions under section 41 of the Fair Trading Act 1992.
The introduction of the new requirements proposed in this bill may require some credit providers to update their procedures for assessing a new applicant's capacity to obtain credit. Accordingly, the government supports the delayed commencement date of 25 November, which will give the industry sufficient time to put in place any new procedures.
Mr Speaker, the government supports the bill and the amendments.
MR STEFANIAK (5.51): Ms Tucker's bill, to which she has amendments resulting from a discussion she had with the Department of Justice and Community Safety, had its genesis in a bill Mr Rugendyke put before this house which, with our support, was passed in principle, following which the debate was adjourned. As the Chief Minister said, that bill was about problems of extending credit to people who did not necessarily have the capacity to pay.
I recall Mr Rugendyke at the time raising concerns about six-year-old children being given credit cards. Whilst I do not think such stark incidents have occurred in the ACT, Mr Rugendyke raised other worrying incidents that were occurring in the territory.
Having talked to representatives of the banking industry, I note that they indicate that they effectively ensure someone has capacity to pay-that would also be common sense-before they issue them a credit card. A lot of what Ms Tucker proposes would not be a huge impost, as it occurs already.