New credit laws start this week

Desperate measures can be tempting in hard times.

Especially as many Australians are in hard times at present, even though the nation – as a whole – has so far managed to dodge outright recession.

It is particularly hard. in such circumstances, to avoid bad decisions, which make things even worse.

A loan, taken on bad terms, can look like the quick fix you might need, when things get tough.

It isn’t.

Those who have fallen into this trap, though, might get a little unexpected help soon.

That’s because the Federal government has just announced new consumer credit protection laws, that might well offer some redress.

The new laws are meant, in particular, to protect consumers from what the government calls “predatory lenders.”

The Federal Financial Services Minister, Chris Bowen, said the new laws would replace older State and Territory laws, that have been in place since 1992.

They will be based on four principles.

• Responsible lending that ensure consumers are not lured into loans they cannot reply
• Extended hardship provisions, on loans of up to $500,000
• Bans on predatory practices, such as using household items as security for cash loans and
• A single national licensing regime and consistent requirements across the nation.

Mr Bowen described the new laws as “a significant reform.”

He said the new laws  would come into effect on Thursday.

Mr Bowen said  said they represent the culmination of a practical, co-operation partnership between all levels of government, industry, consumer groups, policy makers and regulatory authorities.

Despite all this goodwill, though, the new laws will not become your primary protection against predatory lenders.

Your best defence, as always, will still be your own natural caution.