Banks to be fined for higher credit offers
(3 May 2011 – Australia) The Gillard government introduced legislation to parliament banning lenders from unsolicited "tick-a-box" offers of higher limits for credit cards.
Banks will be fined A$220,000 every time they invite customers to raise credit card limits. Lenders will no longer be able to let customers spend more than 10 percent above their pre-determined credit card limit.
Complaints from banks to Treasury have stated that the law is too heavy-handed and Australia Bankers Association chief executive Steve Munchenberg said the new law "goes way over the top".
'At this point any bank that even writes to an existing customer and suggests they might like to apply for an increase in their credit limit could be in breach of this legislation,' he said.
Mr Munchenberg said this could force some customers to resort to loan sharks if banks are unable to offer credit cards to those without steady jobs.
'There will be people with an irregular income or who are not in regular employment who will find it harder to get credit,' he said.
'The banks are going to be a lot warier about lending to them and there is a danger people will be forced into an unregulated market.'
The legislation proposes that bans begin on 1 July 2012 to give lenders time to prepare; banks will only be able to offer higher limits to customers who have given permission to be approached.
Complaints from banks to Treasury have stated that the law is too heavy-handed and Australia Bankers Association chief executive Steve Munchenberg said the new law "goes way over the top".
'At this point any bank that even writes to an existing customer and suggests they might like to apply for an increase in their credit limit could be in breach of this legislation,' he said.
Mr Munchenberg said this could force some customers to resort to loan sharks if banks are unable to offer credit cards to those without steady jobs.
'There will be people with an irregular income or who are not in regular employment who will find it harder to get credit,' he said.
'The banks are going to be a lot warier about lending to them and there is a danger people will be forced into an unregulated market.'
The legislation proposes that bans begin on 1 July 2012 to give lenders time to prepare; banks will only be able to offer higher limits to customers who have given permission to be approached.
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