Centre Alliance gives payday lenders both barrels

The Centre Alliance Party is employing an unusual strategy to put pressure on the government to legislate reforms to the small amount credit contract and consumer leasing markets. It has introduced separate bills in the House of Representatives and in the Senate, which both mirror legislation the government drafted in 2017 but never acted on.

Yesterday, Centre Alliance Senator Stirling Griff introduced a private member's bill, the National Consumer Credit Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019.

The bill is, for all practical purposes, identical to one introduced in the House of Representatives by Centre Alliance member Rebekha Sharkie in September.

Both bills mirror a government exposure draft bill released for consultation in October 2017. The government was responding to recommendations of the Independent Review of Small Amount Credit Contract Laws, which recommended a tougher approach to SACCs and consumer leases.

After releasing the draft the government went cold on the reform, which most commentators say was a response to industry lobbying. Sharkie's bill put the issue back on the agenda and Griff's bill is designed to increase the pressure.

Centre Alliance has gained the support of the Labor Party for its campaign. Yesterday's bill was co-sponsored by Labor Senator Jenny McAllister.

The bills introduce a cap on the total payments that can be made under a consumer lease. They require small amount credit contracts to have equal repayments and equal payment intervals.

They remove the ability of SACC providers to charge monthly fees in respect of the residual term of a loan where a consumer repays the loan early.

They ban door-to-door selling by lessors and credit assistance providers. And they strengthen penalties.

In addition to the provisions in the government's 2017 draft, the Centre Alliance bills amend credit regulations to reduce the amount of a Centrelink recipient's earnings that can be used for each repayment from 20 per cent to 10 per cent.