On 21 December 2012, the Minister for Financial Services and Superannuation released for public consultation draft legislation to address perceived gaps in existing credit regulation and enforcement. In recent investment collapses, high levels of losses to individual consumers were exacerbated in some situations by the use of credit to invest. Some activity by market participants can distort the risk-return relationship. Misconduct that results in the distortion can take a number of forms, with the effect of these distortions amplified where people have borrowed to invest. The proposed changes would only implement responsible lending obligations on lenders in situations where there is the highest risk of detriment to consumers. While difficult to quantify the costs and benefits, costs to business will include implementation and on-going compliance costs related to greater due diligence and other procedures. Consumers should benefit from reduced risk to specific high-risk practices and greater capacity to seek and obtain redress. The Regulation Impact Statement was prepared by the Treasury and assessed as adequate by the Office of Best Practice Regulation.
- Credit for investment [
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