OK, hands up - how many of you are aware that on 1st January 2011 a whole new regime was introduced to consumer credit?
Yep, you're the consumer and you probably have credit so how come you didn't know about these new laws? Because they've mainly been publicised to people who have to comply with them, who (of course) already know about them!
Since I don't run a newspaper or TV station and am not in government (thankfully) the best I can do is to let you know what changes have been introduced via this blog.
The most important change is that we now have national consumer credit protection laws. Until this year, each state had its own (different) laws around what could and couldn't be done, what was and wasn't covered, by the term 'consumer credit'.
Consumer credit generally meant home loans, credit cards and personal loans. The interpretation has been broadened to also include residential investment property loans, so that property investors, who are not necessarily experienced business people, are also covered by the new laws.
The biggest change for our industry has been the introduction of credit licensing (governed by ASIC). Previously, in most of Australia, anyone could advertise themselves as a mortgage or finance broker and there were no barriers to entry.
Now, in order to arrange the loans above, a broker, lender or intermediary must hold a credit license. (We got ours recently so, yes, we're still in business.)
This is a much better situation for those who want to get some advice but are not sure who to ask. The first thing to check now is whether the adviser you talk to has a credit license. (Financial planners and accountants are covered by a different set of regulations; the ones I'm referring to here apply only to those involved in arranging credit.)
If they have a credit license, they must belong to an external dispute resolution scheme (aka Ombudsman) so you have some recourse if things go wrong. That's good to know!
If you've taken out a loan before and do so again from now on, you will receive a lot of different information to that supplied previously. That's because credit advisers now have to provide certain information to all clients that reach a minimum standard.
Best of all, the law is now the same all around Australia. So, if you buy an investment property in another state, you know that the rules will be the same as they are at home. (It's also pretty handy for businesses in this field who do business in more than one state.)
Mind you, we are still waiting for ASIC to tell us exactly what a 'Credit Guide' is and what it must contain. We were supposed to start handing them out on the 1st January 2011 however the implementation was delayed until 1st April as, by the middle of December, ASIC still hadn't worked out what they wanted us to do.
The funniest thing is that we still don't have the guidelines and we're nearly at the second deadline.
At least you can be certain that we'll introduce a credit guide as soon as someone tells us what it is!
So, you're really interested in this and want to know what the new laws are all about? I'll give you some links to start with:
That should do - don't want to bore anyone to death.
If there's anything you have a burning desire to know about these laws, please have a look first (!) and if you can't find it, let us know. We'll see what we can do to help. No, really, we will!
By the way our ASIC Credit Licence Number is: 391439, just in case you were wondering.
Until next time.......M
