New credit laws `will hike lending cost`

Consumers will end up paying more for a loan and waiting longer for approval under
new "heavy-handed" consumer credit laws, the Australian Bankers' Association (ABA)
says.
ABA director Ian Gilbert says new rules requiring lenders and brokers to be licensed
from November will mean more paperwork and assessment of loan applications.
"We're not going to be thanked by consumers for that and the conclusion we would
reach from that is that it's more likely than not the cost of lending will go up,"
Mr Gilbert said on Monday.
"There is likely to be extra process which will probably result in delays in the
finalisation of loan applications."
Mr Gilbert said the new rules would "go a long way" towards eliminating predatory
and unscrupulous lending practices but failed to recognise responsible lending
practices by the banks.
The changes would make lenders more risk averse because of the substantial penalties
they would face for breaking the rules, he said.
"It's a natural flow-on effect of a heavy-handed sanction regime where there are
also additionally onerous obligations," Mr Gilbert said.
Credit unions and building societies were also critical of the new laws, with
industry body Abacus saying responsible lenders would be penalised and buried in
"meaningless red tape".
Abacus chief executive officer Louise Petschler said the laws would replace
ineffective state regulations and create a level playing field but warned against
too much regulation of responsible lenders.
"Focus the legislation on the poor behaviour of dodgy lenders and brokers - don't
drive up the cost of borrowing with ineffective red tape," Ms Petschler said in a
statement on Monday.