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STANDING COMMITTEE OF OFFICIALS OF CONSUMER AFFAIRS
CONSUMER CREDIT CODE
STATEMENT OF ENFORCEMENT POLICY
STATEMENTS IN COMPARISON RATE SCHEDULES REGARDING SECURED
AND UNSECURED LOANS
The Consumer Credit (Queensland) Amendment Act 2002 inserts into the
Consumer Credit Code a new Part 9A, which provides for the mandatory disclosure
of comparison rates:
- in advertisements for fixed term credit which feature an annual percentage
rate, and
- in comparison rate schedules which are to be made available to consumers.
Section 146M(4) of the Act provides that, where a comparison rate is calculated
for certain prescribed amounts of credit, the comparison rate schedule must
clearly state whether the comparison rate has been calculated for a secured
or unsecured loan.
Section 33E of the Consumer Credit Amendment Regulation (No. 1) 2003
prescribes amounts between $10,000 and $30,000 inclusive as amounts for which
a statement regarding whether the comparison rate is for a secured or unsecured
loan must be made.
The rationale for this requirement is that there can be a significant difference
in the comparison rate for a secured loan and an unsecured loan of the same
value, due to the higher interest rate for unsecured loans and the higher up-front
fees for secured loans.
It has been pointed out that allowing comparison rate schedules to indicate
whether a comparison rate is for a secured or unsecured loan for amounts other
than those between $10,000 and $30,000 would be useful to consumers. However
there are doubts about whether comparison rate schedules are permitted to contain
this information, as section 146P(3) of the Act provides that a comparison rate
schedule is not to contain any information other than that required or permitted
by or under the Consumer Credit Code.
The Standing Committee of Officials of Consumer Affairs (SCOCA) has agreed
that the Consumer Credit Regulation 1995 should be amended to allow comparison
rate schedules to indicate whether comparison rates are for secured or unsecured
loans for all loan amounts in the schedule.
Until this amendment is made, SCOCA has endorsed the following enforcement
approach by government consumer agencies in relation to this issue:
Comparison rate schedules are permitted to indicate whether comparison
rates are for secured or unsecured loans for loan amounts other than the amounts
which are prescribed by section 33E of the Consumer Credit Amendment Regulation
(No. 1) 2003.
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