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Legislative Assembly for the ACT: 2002 Week 3 Hansard (6 March) . . Page.. 597 ..
MS TUCKER (continuing):
I contend that, although the bill does change the legislation, it does so in a way that clearly maintains the effect at law of section 70 of the consumer credit code. This argument is backed up by Mr Richard Viney, in his final report on the review of the Banking Industry Code of Practice for the Australian Bankers Association. I quote:
In my view UCCC section 70 (2) (l) already enables a debtor to apply for the re-opening of a contract on the ground that if proper enquiries had been made by the bank at the time the credit increase was made, those enquiries would have revealed likely future hardship.
That quote was from the review of the Code of Banking Practice final report, October 2001, page 50.
In fact, although this bill mentions credit contracts generally, the only type of credit that would be affected is unsolicited extensions to credit card limits. Before providing other forms of consumer credit-house mortgages, et cetera-a thorough assessment is carried out. It is this insidious area which has caused significant hardship for some members of our community.
Requiring an adequate assessment to be carried out is hardly a new practice. We are not asking the industry to learn a new trick. The chair of the management committee was also concerned that the bill, as then drafted, would have caught business or investment lending in its provisions. This would be problematic, because the existing system of credit and banking laws distinguish clearly between consumer credit and business credit. By defining credit contracts as those to which the consumer credit code applies, my bill removes this problem.
The final objection was around uniformity for its own sake. Mr Stefaniak said on this point:
I would like to emphasise my concern that credit providers, particularly the big banks, who are bound by the credit code, may not think it worth while to extend credit in the ACT if they have to substantially amend their national lending procedures to accommodate the ACT region. We are, after all, only 1.7 per cent of the Australian population. Moreover, this has great potential to increase compliance costs for credit providers, which would almost invariably be passed on to consumers. That would result in additional costs and delays-an additional imposition on ACT consumers-and I do not think that is something any of us want.
The point is, Mr Speaker, that the analysis used by the banks to generate the mass mail-outs is not an adequate assessment of capacity to pay. These financial institutions are therefore regularly choosing to enter into challengeable contracts. Whilst it is not much trouble for the bank or credit card company to rectify whatever proportion of the contracts are challenged, it is a serious problem for the people who rightly-legally, if we look at the effect of this section-should not have been offered the credit extension in the first place.
It is much harder for the distressed, ashamed, indebted person to correct an erroneous contract than it is for the bank. The indebted person may choose other, even more destructive, options to deal with this debt, not realising they can get out of it. This creates
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