Consumer group Choice has responded to the Senate Economics Legislation Committee’s recommendation that a responsible lending amendment be passed by releasing details of the large number of complaints about credit products to the Australian Financial Complaints Authority.
According to Choice, there have been 31,000 complaints to AFCA about credit products since the end of the Hayne royal commission hearings (based on an analysis of AFCA data covering November 2018 to December 2020).
Complaints cover irresponsible lending, incorrect fees, poor customer service, fraud and unfair terms and conditions.
Choice chief executive Alan Kirkland said: “The banks promised they’d clean up their act after the shame of the royal commission hearings but over 31,000 credit complaints show there are still huge problems in the system.
“Repealing safe lending laws is an extraordinary thing to do when many Australians are struggling in the wake of COVID-19.”
On Friday, the Senate Economics Legislation Committee recommended that a bill to largely remove responsible lending rules from the National Consumer Credit Protection Act be passed.
The committee report said the current operation of the rules is overly prescriptive and that APRA and the Australian Financial Complaints Authority have sufficient powers to guarantee lenders continue to lend responsibly.
The Labor and Greens senators issued separate dissenting reports. Labor says: “It is clear that the changes in the bill will overwhelmingly benefit one side of the lending market: banks and lending institutions.”
The National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2019 removes the responsible lending provisions from the Act, except where they apply to high-risk lending (such as small amount credit contracts and consumer leases), relying instead on APRA’s prudential supervision to regulate lending practices.
Lenders will be entitled to rely on the information provided by borrowers, in the absence of reasonable grounds to suspect that information is unreliable. This would replace the current “lender beware” approach with a “borrower responsibility” approach.
The bill also extends the best interest duty that currently applies to mortgage brokers to other “credit assistance providers”.
And it gives the responsible minister power to set non-ADI credit standards.