Minister for Fair Trading Virginia Judge today said new laws now in force would ensure NSW consumer protections remain in place while new national credit laws are phased in.

Ms Judge said finance brokers and micro lenders would remain bound by NSW laws until they are replaced by national measures.

“The new laws now in effect will prevent NSW consumers being exposed to unscrupulous brokers and exorbitant fees,” Ms Judge said.

In October 2008, the Council of Australian Governments agreed to harmonise credit laws and transfer regulation of consumer credit and finance broking to the Commonwealth.

The NSW Credit (Commonwealth Powers) Act 2010, which provides for the start of the handover of consumer credit regulation from 1 July 2010, came into force on 1 April 2010.

“I support the commonsense national reforms which bring the consumer credit market in line with all other sectors of the financial services industry,” Ms Judge said.

“Industry members will be required to register with the Australian Securities and Investments Commission before 1 July 2010 in order to continue operating.”

Ms Judge said the State Government would retain key protections for NSW consumers throughout the staged process, which runs through to 1 July 2011.

These include:

• A ban on upfront broking fees,
• The right to challenge excessive broking fees or inappropriate conduct in the Consumer Trader and Tenancy Tribunal,
• Written disclosure of all broking fees and charges in a single document and
• Retention of the State’s 48 per cent maximum annual interest rate cap on all consumer credit contracts.

“Fringe brokers who charge excessive fees and refer clients to high interest lenders can increase financial distress for consumers who can’t pay off their loans,” Ms Judge said.

“I urge anyone with money worries to seek assistance from a financial counsellor before turning to other options such as a fringe lender.

“You may also be eligible for a loan of up to $1,200 for essential household items and medical goods and services under the No Interest Loan Scheme.

“The NSW Government is providing record levels of funding across the State for these financial support services – $20 million over three years – to help families in need.”

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