Federal Cabinet has signed off on two new pieces of legislation to stop predatory lending practices by banks, card providers and finance brokers.

News Ltd says credit card providers that push unwanted cards and increased limits onto customers who can’t afford them will lose their lending licences under the legislation.

The package, to be introduced to Parliament by September, will also cover bank and non-bank home loans. The elderly, more of whom are using reverse mortgages to compensate for shrinking superannuation returns, will also receive new protection.

After seven months of negotiations driven by the Superannuation and Corporate Law Minister Nick Sherry, the states have handed over their powers and there will be uniform national legislation to protect borrowers.

News Ltd says Cabinet sources have confirmed that under the new laws, to be overseen by the Australian Securities and Investments Commission, all credit providers will have to be licensed.

All credit provision will be subject to new responsible lending conduct rules, which will shift the onus of checking the credit suitability of a borrower to the lending institution.

If a lender breaches the responsible lending code once, it will be subject to hefty fines.

Borrowers will be able to take the lender or bank to an independent disputes resolution body.

Repeated breaches by lending institutions will see them lose their lending licences.

AAP