The Biil, if passed, will introduce the concept of a maximum annual percentage rate for
consumer credit contracts. In calculating the rate, fees and charges will be taken into account.
The Regulations are expected to prescribe a 48 per cent per
annum annual percentage rate cap on consumer
loans. It is also expected that credit fees or
charges arising from the establishment or maintenance of a temporary
credit facility by an ADI will not be included in the calculation.
There are currently
no caps on interest rates in Queensland and lenders can charge high
interest rates, fees and charges on loans. Victoria, New South Wales and the Australian Capital Territory currently have interest rate caps to control the cost of consumer credit.
Credit providers who charge above the
legislated maximum will be required to pay back any amount over the cap
and will face civil penalties of up to $500,000 for breaching the
Consumer Credit Code. They will also face criminal penalties of $10,000 for individuals and $50,000 for corporations.
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