COAG Agreement

The Council of Australian Governments (COAG) reached an in-principle agreement on 26 March 2008 that the Australian Government would assume responsibility for regulating mortgage credit and advice, including non-bank lenders and mortgage brokers, as well as margin loans. COAG also agreed to investigate what other credit products, such as store credit and personal loans, best sat within the Commonwealth's regulatory responsibility.

Subsequently, on 3 July 2008, COAG agreed that the Australian Government would assume responsibility for regulating all consumer credit products.

The development of a national consumer credit regime is an important initiative that will address the deficiencies that have long existed in credit regulation by establishing a consistent and robust consumer credit protection framework that is flexible, competitive and adaptable for a rapidly evolving sector both domestically and internationally.

At the 2 October 2008 meeting, COAG also agreed to the implementation plan for the Government to assume responsibility for all areas of consumer credit.

The Government agreed to implement national credit regulation in two phases, to make the transition as smooth as possible.

It was agreed that Phase One will be in place by mid-2009 and phase two by mid-2010.

View the COAG Communiqués at www.coag.gov.au .

The draft legislation  released on 27 April 2009 delivers on Phase One of the COAG Agreement.

Download Implementation Plan
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The Implementation Plan

On 2 October 2008  the Government announced its two-phase implementation plan for national regulation of consumer credit.

The draft legislation  released on 27 April 2009 delivers Phase One of the Government's announcement of 2 October 2008.

Key elements of Phase One:

  • Enacting the existing State legislation, the Uniform Consumer Credit Code (UCCC), into Commonwealth legislation.
  • Establishing a national licensing regime to require providers of consumer credit and credit-related brokering services and advice to obtain a licence from ASIC.
  • Extending the powers of the Australian Securities and Investment Commission (ASIC) to be the sole regulator of the new national credit framework with enhanced enforcement powers.
  • Requiring licensees to observe a number of general conduct requirements including responsible lending practices.
  • Requiring mandatory membership of an external dispute resolution (EDR) body by all providers of consumer credit and credit-related brokering services and advice.
  • Extending the scope of credit products covered by the UCCC to regulate the provision of consumer mortgages over residential investment properties.
  • Extending the operation of the Corporations Act to regulate margin lending.
  • Regulation of trustee corporations.
  • Phase One legislation in place by mid 2009.

Key elements of Phase Two:

  • Enhancements to specific conduct obligations to stem unfavourable lending practices, such as a review of credit card limit extension offers, an examination of State approaches to interest rate caps; and other fringe lending issues as they arise.
  • Regulation of the provision of credit for small businesses.
  • Regulation of investment loans other than margin loans and mortgages for residential investment properties.
  • Reform of mandatory comparison rates and default notices.
  • Enhancements to the regulation and tailored disclosure of reverse mortgages.
  • Examination of remaining existing State and Territory reform projects.
  • Phase Two legislation in place by mid 2010.

Miscellaneous