Care Financial Counselling Service and Consumer Law Centre (Care) and the ACT Council of Social Service (ACTCOSS) have made a joint submission calling on Federal Parliament to ensure important consumer protections remain in place for the benefit of all Australians.
Care CEO, Carmel Franklin, said: “Our joint submission to the Senate Economics Legislation Committee Inquiry into the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 calls on Parliament to vote against the Bill in its entirety.
“If passed, the amendments will have a significant detrimental impact on the most disadvantaged and vulnerable consumers in the ACT and Australia more broadly.
“Among other things, this Bill would reduce people’s legal rights against lenders and brokers while also reducing the incentives for lenders to comply with lending standards.
“We are extremely concerned that the amendments contradict the primary recommendation of the Banking Royal Commission, that the National Consumer Credit Protection Act 2009 not be altered to remove the obligation to assess unsuitability of consumer loans by banks, which the government previously agreed to.
“The government’s rationale is that removing responsible lending obligations (RLOs) will improve consumer and business spending in the context of COVID-19. But there is no evidence to suggest that current laws have harmed or restrained the lending ability of the finance sector to those who have the capacity to take advantage of the numerous credit products on offer.
“In this context it seems difficult to argue that the RLOs are burdening our economy. Rather the RLOs help to protect the economy by reducing ‘bad debt’.”
ACTCOSS CEO, Dr Emma Campbell, said: “Many people in the ACT are struggling as the cost of living increases, unemployment grows and JobSeeker is cruelly cut. The removal of RLOs will drive irresponsible lending to vulnerable households as people desperately try to access funds to cover basic costs of living.
“During the COVID-19 pandemic we saw a significant increase in the number of vulnerable, disadvantaged, and low-income households in the ACT. The number of people in the ACT receiving income support while looking for work is currently double what it was 12 months ago.
“The number of people living in poverty in the ACT increased from under 30,000 in March 2020 to approximately 38,000 people in October 2020. Since then, the ACT’s poverty rate is expected to have risen again, following a further cut to the Coronavirus Supplement from 1 January 2021.
“Responsible lending protections are vital to maintaining a strong economy and protecting consumers, particularly those most vulnerable, from falling victim to unscrupulous lenders and finding themselves in a cycle of debt.
“To ensure consumers retain strong credit protections so that they cannot be pushed into unaffordable, unsuitable, or unsustainable credit arrangements, we call on the Committee to strongly oppose the Bill and recommend that the Parliament reject the Bill in its entirety.”
Care are primary providers of financial counselling, legal and related services for low to moderate income and vulnerable consumers in the ACT.
ACTCOSS advocates for social justice in the ACT and represents not-for-profit community organisations.
For more information or comment, please contact
Ms Carmel Franklin, CEO, Care, on 02 6257 1788, or
Dr Emma Campbell, CEO, ACTCOSS, on 0424 910 617 or 02 6202 7200.