AUSTRALIAN BANKERS’ ASSOCIATION TO PARTICIPATE IN NSW ROUNDTABLE TALKS ON CREDIT

Media Release

Sydney, 22 February, 2001: The Australian Bankers’ Association (ABA) says credit is an important tool for people to manage their financial affairs and banks play a very important role in helping their customers achieve this.

The ABA is to participate in roundtable discussions on household debt today convened by the NSW Minister for Fair Trading, the Hon. John Watkins.

David Bell, CEO of the ABA, said: "Banks have to be prudent in their lending practices ­ they’re not in business to provide credit to those who have no prospect of repaying.

"Not every application for a credit card is successful ­ on average, one in four applications to banks for credit cards are declined.

Phone-in research conducted by the NSW Department in November last year showed that a small percentage (less then 1%) of the credit card holders in NSW experienced some problems with credit.

"The report does not distinguish between credit cards and store cards ­ the latter have different terms and conditions."

Mr Bell said with lower interest rates and a strong economy, consumers have been borrowing more.

"There is a strong demand for credit and banks aim to make sure that people can service their credit commitments.

"I understand there will be a few who experience servicing difficulties but the majority manage credit sensibly and responsibly.

"Overall, consumers are managing their access to credit responsibly but my advice would be: don’t go in too deep, give some thought to how you would manage repayments if you lost your job, understand the risks and go to a responsible lender.

"There will always be cases where hardship arises and our members are encouraged to treat these cases sympathetically. If you are in financial trouble, I urge you to talk to your bank.

"ABA welcomes the opportunity to participate in the forthcoming discussions and to look at ways that might enhance the responsible use of credit."