Yvonne Henderson

Yvonne Henderson

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    Move to modernise Credit Act

    2/12/1992 12:00 AM
     
     
    The State Government has moved to modernise the Credit Act to ensure it protects Western Australians taking loans at today's interest rates.
     
    It has introduced legislation to allow changes to the Act to cover people borrowing at interest rates lower than 14 per cent.
     
    Currently the Act only covers loans with interest rates above 14 per cent per annum.
     
    Mrs Henderson told the Legislative Assembly that when the Credit Act was framed in 1984, interest rates ranged from 16 to 25 per cent and higher.
     
    It was not then envisaged they would fall to the present rate of around 12 per cent.
     
    "While this is a benefit to consumers, a side-effect is that a large number of recent borrowers are denied protection under the Act," Mrs Henderson said.
     
    "Present indications appear to be that interest rates are unlikely to rise substantially for some time."
     
    She said the Credit Amendment Bill sought to allow the threshold rate to be varied according to the needs of the market, and fixed by regulation.
     
    The finance sector had indicated that a threshold rate of six to eight per cent would adequately cover borrowers, and regulations would be prepared to fix a new interest rate threshold in this range.
     
    "The Labor Government brought in the Credit Act soon after coming to power, as we believe it is vital that the many people using credit are given adequate consumer protection," Mrs Henderson said.
     
    "It is equally vital that the Act is updated to provide this protection despite changes to the finance market."
     
    The Bill, which also amends insurance disclosures under the Act and the powers and procedures of the Commercial Tribunal, will be debated in Parliament this week.