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Date Published : Wednesday, June 11, 2008
Australia's financial services regulations are set for landmark changes intended to improve protection for consumers - but what will they affect and how would the planned changes impact on your personal finances?
According to news.com.au, the proposed reforms in the Green Paper on Finance and Credit Reform will see the responsibility for regulating a number of financial products transferred from state authorities to the Commonwealth.
Nick Sherry, minister for superannuation and corporate law, said the move is needed because at current regulations in these areas are "either duplicated, patchy, confusing, very hard to change or even non-existent".
Perhaps the biggest area of consumer finance that will be affected by the planned overhaul will be the mortgage market.
Under the proposed rules, mortgage advice and brokering would be regulated by the Commonwealth, rather than states or territories. This means consumers looking to take out a home loan to buy or build a property would receive advice that would have to meet government-set standards of appropriateness and quality.
According to Treasury figures, mortgage loans currently make up around 86 per cent of all loans in Australia and introducing a single system of regulation for advice would reduce the potential for inappropriate lending.
Other forms of consumer credit such as credit cards and personal loans are not, under the current proposals, set to fall under Commonwealth control.
However, the green paper invites views on the future of consumer credit regulation and therefore a new role for the Commonwealth could emerge.
The Green Paper on Finance and Credit Reform is currently open for comments. To submit your opinion on the future of financial services law in Australia, you can either go to the treasury.gov.au website or contact the Treasury's Corporations and Finance Services Division.
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