AMEX changes interest policy following ASIC concerns
American Express Australia (AMEX) has agreed to slash its policy of increasing interest rates for credit card customers in default, following concerns raised by the financial services regulator.
According to the Australian Securities and Investments Commission (ASIC), AMEX increased the interest rate on the whole balance where a card holder had defaulted in making their minimum repayment three or more times over 12 months.
ASIC found the increase in rates was up to 6 per cent for a 12-month period, while the policy affected 7.9 per cent of credit card accounts issued by AMEX.
"ASIC was concerned that this policy was potentially in conflict with the restrictions on the charging of default interest under the National Credit Code," the regulator stated.
As a result of the changes, the holders of those accounts would receive a reduction in interest rate of up to 6 per cent, starting from today.
ASIC Commissioner Peter Kell said the regulator believed the policy intent behind the National Credit Code was to limit the level of increased charges which may be imposed on a borrower in default.
"ASIC welcomes AMEX's agreement to change its interest rate practice," Kell said.
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