Banks try to earn credit for reforms

MAJOR banks will no longer be able to hassle credit card customers with unsolicited offers to increase their credit limit as part of a sweeping crackdown.

An agreement lodged with the nation’s corporate regulator also means customers would only pay interest on what they owe after interestfree periods expire — not the full amount of the purchase as they currently do — saving some borrowers thousands.

The deal largely pre-empts reforms planned by the Turnbull Government earlier this year, which have yet to pass Parliament.

Those changes, announced by Treasurer Scott Morrison in August, crack down on predatory behaviour by the banks in pushing credit cards on families that can’t afford them. They were announced after concerns about the impact of high interest rate cards and zero per cent balance transfers, particularly on vulnerable families.

The new agreement also comes as the royal commission into the banks is preparing to get under way.

Australian Bankers Association chief executive Anna Bligh said the changes were a way of “making changes to processes, providing customers with more info and introducing higher standards for how banks serve their customers”.

“This new set of rules and behaviours will go a long way in addressing the expectations that Australians have of their banks,” she said. “Banks most certainly do not underestimate the challenge ahead of them and will continue to make the necessary changes and improvements that their customers expect.”

A spokeswoman for Mr Morrison said the government would also require “affordability measures (and) providers to simplify how interest is calculated”. “We support the banks getting on board with the government’s crackdown on misconduct by credit card providers,” she said.