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Prime Minister Malcolm Turnbull and Treasurer Scott Morrison, pictured in Parliament this week. Picture: AAP
THE Turnbull Government wants to ban banks and other credit card issuers from backdating interest charges and charging interest on balances that have been paid-off as part of a new crackdown on not so fantastic plastic.
With Labor still pushing for a royal commission into the financial services sector, the Federal Government today added to its plan for a banking cop by flagging credit-card reforms that would compel lenders to give customers online options to cancel a card or reduce their credit limit.
Acknowledging there was a “relative lack of competition on ongoing interest ratesâ€, Treasurer Scott Morrison flagged moves that also included forcing issuers to:
* PROVIDE data on the annual cost of a consumer’s credit card use and to “prominently display†annual fees;
* CONTACT consumers who persistently make small repayments; and
* TIGHTEN responsible lending obligations so a consumer only gets a credit limit they can repay with a “reasonable periodâ€.
Treasurer Scott Morrison has flagged new rules for banks when it comes to credit card charges. Picture: AAPSource:AAP
Mr Morrison said the changes would provide greater protection to vulnerable consumers, increase competitive pressure on credit-card issuers and give consumers with the information to make the best choices about how they use their credit cards.
But Labor’s spokesman on financial services, Jim Chalmers, said: “Nobody will believe the Government really cares about people’s credit cards when they put a discussion paper out five minutes before an election.â€
In a move to stamp out one of the least understood traps of plastic, the Government proposes to standardise and simplify the application of interest when an interest free period is lost due to a partial payment.
Currently, if the interest-free period is forfeited, interest will be charged from the date of the purchases on the full purchase cost, even though there was a partial payment by the end of the statement period.
Under the proposed change, interest will be charged from the end of the statement period on the
amount outstanding at the end of the statement period, as happens in the US under the Truth in Lending Act.
The Australian Bankers’ Association said it was too early to comment.