Consumer groups have hardened in their opposition to the Morrison Government’s plans to abolish responsible lending laws, which were introduced in 2009. The Financial Rights Legal Centre has urged Senate crossbenchers to vote against any such move, while Financial Counselling Australia and CHOICE warn that scrapping the responsible lending regime would make it easier for lenders to take advantage of borrowers:
“We’re seeing record loans,” said Julia Davis, policy and communications officer at the Financial Rights Legal Centre.
“We’ve sold more loans in Australia than ever before in history … that doesn’t tell me that we need to ease responsible lending standards,” Ms Davis said.
Along with CHOICE and more than 120 organisations across the country, the centre called on the government to save “safe lending” in an open letter to Parliament late last year.
CHOICE chief executive Alan Kirkland’s initial opposition to the changes has only hardened since the draft amendment was released, and home lending continued to increase.
“There is no issue with access to credit, it’s clear that credit is flowing freely – particularly to owner-occupiers,” Mr Kirkland said.
Both Ms Davis and Mr Kirkland fear the changes could provide borrowers with access to credit they couldn’t afford, with banks facing no penalty if they acted in contravention of the existing responsible lending laws. It would also remove the right for borrowers to take legal action against lenders…
“Why in the world, in a time when people are struggling, … would we just put people at risk like this,” Ms Davis said…
Ms Davis compared unwinding responsible lending laws, introduced in 2009, to “throwing away an umbrella in a rainstorm because you’re not getting wet”. Even with protections in place, people had managed to find themselves loaded up with toxic debt, she said, citing hearings of the financial services royal commission.
Remember, the very first recommendation of the Hayne Banking Royal Commission was to maintain responsible lending laws:
This came after the Royal Commission documented extensive cases of criminal lending and behaviour.
Given neither of Australia’s financial regulators, ASIC and APRA, were consulted on the move.
The decision to axe responsible lending laws has the hallmarks of a grubby deal between the Coalition and its financial backers in the banking and property industries.
Labor, The Greens and the Senate cross-bench must block the legislation.
We cannot allow the findings of the Hayne Banking Royal commission to be usurped so brazenly.