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Credit card reforms welcome: ACCC & ASIC must protect consumers.

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Senator Stephen Conroy Deputy Opposition Leader in the Senate Shadow Minister for Finance, Small Business & Financial Services

27 August 2002

Credit Card Reforms Welcome ACCC & ASIC Must Protect Consumers

The Reserve Bank has identified $350 million of profiteering by banks and credit card companies.

These costs are borne by retailers and all consumers, regardless of whether they use credit cards.

The reforms announced today have the potential to generate significant cost savings for retailers and consumers by

! ensuring that the interchange fee charged for credit card services is more closely aligned with the costs incurred in their provision

! ensuring business does not impose the cost of credit cards on all of their customers regardless of whether they use them

! enhancing competition in the provision of credit card services and raising the prospect of a significant decline in credit card interest rates

Whilst Labor welcomes the reforms, we call on the Government to empower the ACCC to formally oversee their implementation in order to ensure that benefits flow through to retailers and consumers across Australia, in particular those in rural and regional areas.

In particular, credit card scheme participants should not seek to recoup any reduction in revenue resulting from a lower interchange fee by increasing other fees and charges.

In the absence of Government action, Labor will mandate GST style price surveillance powers to the ACCC to ensure that retailers and consumers are not exploited.

The Government must also ensure that ASIC has significant resources to perform its consumer protection function and educate consumers about their rights.

We also note that credit card reform is only the first step in the revitalisation of the payments system. We urge the RBA to move ahead on facilitating reforms of other payment mechanisms, such as debit cards and ATMs, in line with credit card reforms.

Further information: Stephen Conroy: 02 6277 3295 or 0418 383 965 Jane McGill:02 6277 3295 or 0402 11 22 55