The Consumer Credit Review comes at a critical time. First, products and providers in the consumer credit market are progressively becoming more complex and diverse. Second, the amount of personal and household debt held by Australians has never been higher. In Victoria, in any given year as many as 1.3 million people are liable to experience financial stress. Third, the current State and Territory administered Consumer Credit Code has remained largely unchanged since it was finalised in 1994, whilst there has been extensive change to other financial regulation. Fourth, State and Territory Governments have concentrated on implementing the recommendations of reviews conducted between 1998 and 2000, with little opportunity to strategically assess the market, the consumer problems that arise, and the likely future direction of consumer credit.
The Report of the Consumer Credit Review (the Report) demonstrates that consumer credit regulation is not operating as effectively as it could. Loopholes and gaps have emerged because credit products have been introduced that were not envisaged when the current regulation was developed and products that had a relatively small market share have become more prominent. The resolution of some systemic issues has been either delayed or partial, however the risks to consumers are increasing as they take on more debt and deficiencies in regulatory protection expand.
