Banks set to push the credit card limits
BANKS have launched an attack on legislation that would redraw lending rules for credit cards and restrain them from increasing card limits.
Their lobby group said yesterday the scope of draft legislation significantly exceeded expectations.
Under the Federal Government proposal, credit card providers would be banned from offering unsolicited credit limit increases.
Australian Bankers’ Association chief executive Steven Munchenberg said banks had expected the law to apply only to new credit card accounts, not existing credit cards.
“We feel they’ve just cast the net too widely,” Mr Munchenberg said.
“The Bill, as it’s drafted, would basically prevent banks in any way from suggesting to a customer they might want to increase their credit card limit.”
Mr Munchenberg said if the Government were concerned about the controversial practice of offering “pre-approved” increases to card limits, it should tailor the legislation accordingly.
“The Bill goes way beyond what we think is necessary, even to achieve what the Government wants,” he said.
“It just seems to be another example of overkill. Even if there is an issue there, you don’t need this great big sledgehammer to crack the little hazelnut.”
The Federal Government is also proposing to enforce a buffer — the lower of $500 or 10 per cent — for customers who exceed their credit limit, and ban banks from charging fees to customers who use the buffer.
Mr Munchenberg said the industry had previously argued for a buffer but had not agreed on a scale.
Prime Minister Julia Gillard proposed the broad reforms during last year’s federal election campaign.
The Federal Government released the draft legislation last Friday, and is taking submissions about it until today.
Among the other proposed changes, credit card providers would have to allocate repayments to the debts carrying the highest interest penalties first.
Source : www.news.com.au
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