Following recent reforms to the regulation of credit card lending, ASIC has been given the power to set a ‘prescribed period’ for assessing whether a credit card contract or credit limit increase is unsuitable.

Under the revised responsible lending obligations, a credit card contract or credit limit increase must be assessed as unsuitable if it is likely that the consumer would be unable to repay the credit limit within the prescribed period.

The new requirement will apply to licensees that are credit providers or that provide credit assistance in relation to both new and existing credit card contracts from 1 January 2019.