The Australian government will fine banks that make any offers to existing cardholders to raise their credit card limits under legislation parliamentary lawmakers signed into law in late March that takes effect in July.
Financial institutions could be charged up to AU$220,000 (US$230,000 or 165,000 euros) if they violate this rule under the National Consumer Credit Protection legislation, which goes into effect on July 1, according to the government’s Treasury Department.
Moreover, issuers will not be able to allow their existing cardholders who have good credit to surpass their credit limits by more then 10% at any given time. Any bank that suggests to existing customers that they apply for an increase in their credit limit could be in breach of this legislation, according to the Australian Bankers Association, which lobbied against the act.
Prime Minister Julia Gillard proposed the broad credit card reforms during last year’s federal election campaign. The federal government’s Treasury Department released the draft regulation to implement the act in March, and the agency approved it after a two-day consultation and feedback period from the card industry and experts.
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