Financial Counselling Australia has attacked the Morrison Government’s planned axing of responsible lending laws, claiming the changes will plunge consumers deeper into debt:
A report by peak body Financial Counselling Australia found the vast majority of counsellors surveyed want the laws to stay and have used them to get better outcomes for clients drowning in debt.
Financial counsellor Kane Johnson, who works on the National Debt Helpline, said the seriousness of the situation could not be clearer.
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“It’s not uncommon for me to talk to people contemplating suicide because of the debt situation they’re in,” he said…
“With these laws in place we get calls on a daily basis from people so stressed they can’t sleep, their mental health exacerbated, a huge impact on their lives … and that’s with these protections in place.
“It’s just going to happen on a much wider scale if these laws are eradicated”…
“The very first recommendation of the report said the Act should not be amended to alter the obligation to assess unsuitability,” Financial Counselling Australia chief executive Fiona Guthrie said.
“So, Commissioner Hayne made it very clear our responsible lending laws should remain unchanged.
“The Federal Government accepted this recommendation, but it now plans to axe the law, meaning vulnerable people will no longer be protected from getting into massive debt traps.”
Too right. This week masks the two-year anniversary since the final report of the Hayne Banking Royal Commission was handed to the Governor-General. This report documented many cases of criminal and predatory lending by Australia’s banks. So much so that the Royal Commission’s very first recommendation was to retain responsible lending laws in their current form:
However, under the Morrison Government’s consumer credit amendment bill, which was introduced in December, responsible lending obligations will essentially be removed from the national consumer credit rules, with the only exception being small-amount credit contracts and consumer leases, where enhanced obligations will be introduced.
Neither of Australia’s financial regulators, ASIC and APRA, were consulted on these reforms. Instead, the decision to axe responsible lending reforms was a dodgy deal hatched between the Morrison Government and its backers in the banking and property industries.
Labor, The Greens and the Senate cross-bench must unite to block the Coalition’s proposed policy sabotage. The Hayne Royal Commission’s number one recommendation must be upheld, period.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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