Australian parliament has passed a new bill that would crack down credit card providers’ unfair and predatory practices and boost competition in the banking sector.
From July this year, financial services providers in the country will be required to analyse affordability of a credit card based on consumer’s capability to repay the limit within a reasonable duration.
The new laws also call for additional reforms from January 2019, including ban on unsolicited invites from banks to increase credit limit, and simplified credit card interest calculation.
In addition, the banks will be mandated to offer an option for cancelling cards or reducing their limit online.
A press statement from the office of Commonwealth of Australia Treasurer, Hon Scott Morrison read: “This legislation will protect vulnerable Australians from predatory behaviour which seeks to make a quick buck from people’s misfortune, and compound their financial hardship.
“This is the first phase of reforms outlined in the Government’s response to the Senate Inquiry into the credit card market, which seeks to put more power in the hands of consumers.”
The new bill is also expected to increase competition in the country’s banking sector as it will allow even small lenders, which operate bricks and mortar branches or exclusively online, to call themselves banks.