Responsible lending to become law

All credit providers will be licensed and regulated by the federal government by the end of the year under new laws that will be introduced to parliament by September 2009. Lenders will be required to ensure that borrowers have the capacity to repay any loans or credit cards they apply for before approving credit to them.

The proposed National Consumer Protection Bill will replace the state and territory regulatory regimes that currently govern consumer credit. Under the new laws, the government will have the power to cancel the lending license of any bank or lender that does not comply with responsible lending guidelines.