No hardship allowed under new credit law
Breaches of the responsible lending rules will be subject to criminal and civil penalties. The rules are detailed. They cover new loans, refinancing, increases in credit limits and also when a licensee recommends that a consumer remain in an existing credit contract.
One provision says: "A credit contract is unsuitable for a consumer if… it is likely that the consumer could only comply with the financial obligations under the contract with substantial hardship."
There will be two categories of "persons" who engage in credit activities. The first category includes lenders and providers of consumer leases. The second category includes persons who provide credit services, mostly finance brokers but also aggregators and mortgage managers.
Lenders and intermediaries will have to issue credit guides to their customers, detailing the rights of the consumer, and the nature and size of fees that may be charged.
Source: The Sheet