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Simplifying Access to Credit for Consumers and Small Businesses

Media Releases

Date : 06 December 2020

Author: The Hon Josh Frydenberg MP

The Hon Josh Frydenberg MP

The Hon Michael Sukkar MP
Minister for Housing and Assistant Treasurer


9 December 2020


The Morrison Government has today introduced legislation to further support Australia’s economic recovery by reducing the costs and time it takes for consumers and businesses to access credit.

These reforms will simplify Australia’s credit framework, reducing red tape, improving competition and enabling a more efficient flow of credit while maintaining strong consumer protections.

Credit is the lifeblood of the Australian economy, with billions of dollars in new credit extended to households and businesses in Australia each month, helping them to buy a home, grow their business and invest to create jobs.

The principles which underpin responsible lending obligations (RLOs) have been implemented in a way that is no longer fit for purpose and which risks slowing our economic recovery. The prescriptive approach outlined in RLO guidance and adopted by lenders leaves borrowers and lenders facing a ‘one-size-fits-all’ approach – imposing a similar approach to credit assessment for most consumers and credit products, irrespective of their circumstances.

The Government’s reforms will remove the ‘one-size-fits-all’ approach, enabling the more efficient flow of credit to consumers and small businesses, while also strengthening protections for higher risk products and vulnerable consumers using small amount credit contracts and consumer leases.

Key elements of the legislative reforms include:

The Morrison Government will also introduce a new licensing regime to protect consumers from the predatory practices of debt management firms by requiring them to hold an Australian Credit Licence when they are paid to represent consumers in disputes with financial institutions.

The legislation introduced into Parliament will remove unnecessary barriers to the flow of credit to households and small businesses, while protecting those consumers that need it most. Improving the flow of credit is a key part of our Economic Recovery Plan.


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