As the Senate Economics Committee hosts hearings in Canberra today, over 22,000 Australians have joined the call for Federal Senators to strengthen instead of repeal safe lending laws, with many sharing personal stories of unsafe lending harm.
Figures released during the Banking Royal Commission showed that between 2010 and 2018 alone, over 590,000 people received compensation totalling over $350m.* If safe lending laws are scrapped, hundreds of thousands of Australians will lose access to justice.
Since the Federal Government announced plans to repeal safe lending laws, over 125 consumer and community groups have called on the Senate Economics Committee to protect the law.
Jo from NSW told consumer advocates:
"These laws are very important to me as when I was just 18 years old a bank encouraged me to apply for a credit card. I had no employment and every couple of months the bank would call and offer me another $1000 on my limit. I ended up owing $5000 that I did not have a hope of repaying."
Consumer advocates have also pointed to the hypocrisy of the banks for changing their public statements about the role of safe lending laws. Under the shadow of the Royal Commission, banks said they supported laws to protect consumers. They've also told parliamentary committees that the current laws are no impediment to the flow of credit. Now, under cover of COVID, they are asking Parliament to repeal these laws.
CBA response to Banking Royal Commission recommendations
The Senate crossbench will play a pivotal role in deciding whether Australians can continue to access justice through safe lending laws.
Media conference video and photos from consumer groups available [afternoon of 18/02/21] for download here: https://sites.google.com/choice.com.au/save-safe-lending
Consumer groups are available at Parliament House, Canberra for comment.
CHOICE, 0430 172 669, email@example.com
Consumer Action Law Centre, 0413 299 567, firstname.lastname@example.org
Financial Rights Legal Centre, 0414 729 006, email@example.com
Financial Counselling Australia, 0418 334 121, firstname.lastname@example.org
Quotes attributable to Alan Kirkland, CEO of CHOICE:
"The sheer numbers of people who have benefited from these safe lending laws in the past demonstrates the scale of problems for consumers if the banks get their way. People who are struggling will bear the cost of poor lending practices.
"When lenders don't do basic checks, borrowers and their families ultimately bear the cost. If anything, safe lending laws need to be strengthened. The stories we've heard from Australians show us there are too many falling through the cracks."
Quotes attributable to Karen Cox, CEO of Financial Rights Legal Centre:
"Two years after Treasurer Frydenburg pledged to take action on the Banking Royal Commission, the government is instead pandering to banks and lenders by repealing a law that Commissioner Hayne clearly said to apply "as it stands"."
"The removal of safe lending will put individuals and families at risk of all the aggressive lending practices that were rife before the responsible lending regime was introduced in 2009."
"Our Government wants free-flowing credit to reign at a time when unprecedented numbers of Australians have had to ask for loan deferrals amidst COVID-19. It simply defies logic."
"Financial Rights helps thousands of Australians drowning in debt and we continue to see the legacy of debt and disaster that predates the Banking Royal Commission. The last thing people need now is inappropriate and unaffordable credit that only enrichens banks and lenders."
Quotes attributable to Gerard Brody, CEO of Consumer Action Law Centre:
"The Royal Commission was a watershed moment in the history of the Australian banking and financial services sector, but consumer harms and losses will persist and grow if responsible lending laws are repealed.
"Dismantling responsible lending laws has to be the most poorly thought out 'reform' in financial services history, as it will leave individuals and families at risk of exactly the type of conduct that led to the Royal Commission in the first place."
Quotes attributable to Fiona Guthrie, Financial Counselling Australia:
"Financial counsellors simply cannot believe that the Government plans to axe the safe lending laws. They are already seeing people who have so much debt they don't have enough money to buy food or pay for medications. Debt that should not have been provided in the first place. Without these laws, this situation will only get worse."
"If these laws are repealed, it will be too easy for lenders to take advantage of disadvantage. Credit is a complex product. People with low financial literacy, or who have mental health issues, or are affected by family violence or are in desperate circumstances, are particularly at risk of being exploited. We know this happens, because financial counsellors see this in their casework all the time."
*Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Interim Report, p.35-37