Jeffrey Davis Paper Compares US and Australian Credit-Granting Law

Jeffrey Davis of Florida has written Regulating for the First Time the Decision to Grant Consumer Credit: A Look at the First Steps Taken by the United States and Australia.  Here is the abstract:

In this Article, I discuss the changes in three consumer-credit realms. First, I compare the Australian regime applicable to all forms of consumer credit granting, including mortgage lending, to the American regulation of the consumer mortgage-granting decision. Second, I compare the Australian and American approaches to the decision to authorize use of, or increase the credit limit on, individual credit cards. Third, I compare the two approaches to regulating small short-term loans, usually called payday loans. Finally, I compare the enforcement regimes of both countries — perhaps the key to it all.

And here is a paragraph from the Introduction describing some of the differences in the two countries' treatment of consumer credit:

The Australian approach to regulating the decision to grant consumer credit differs systematically from that in the United States. First, Australia requires responsible credit granting in all forms of consumer credit, whereas the United States thus far constrains the decision only in the narrow realms of home mortgage lending, credit cards, and military payday loans. Second, the American concept of responsible consumer lending requires only an assessment of the debtor’s ability to pay, whereas the Australian concept requires a determination of whether the credit is "suitable," requiring not only an assessment of the consumer’s likely ability to pay, but also an inquiry into the consumer’s requirements and objectives in borrowing. Third, Australia requires anyone engaging in consumer credit activity to obtain a credit license. While most American states require licenses to engage in certain types of consumer credit, such as becoming a mortgage broker, there is no such general requirement in any state, and the federal government makes no such requirement at all. Fourth, Australia alone provides a process that is unique in the world for External Dispute Resolution that is cost-free to the consumer.


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