An alliance of consumer groups has launched a new push in Canberra to force the government to introduce the laws it promised in response to a 2016 review of small credit contract laws targeting lenders who take advantage of loans short term high interest, such as Money Converters.
The ongoing delays are frustrating for consumer groups who warn that without the laws, the industry’s predatory behavior continues unchecked, forcing vulnerable people into a spiral of debt.
A recent report by
the financial services ombudsperson criticized the “unacceptable” behavior of some payday lenders after a 130% increase in complaints about the sector.
Payday lenders often target vulnerable low-income people who need quick access to cash, with interest rates as high as 800% for consumer leases or rental programs to buy.
Gerard Brody, managing director of the Consumer Action Law Center, said the delays in new laws were “inexcusable”.
“This is an important issue that the government has known for a long time and affects so many people in the community and often those in very vulnerable circumstances,” said Brody.
Deputy Treasurer Michael Sukkar said the government recognizes the importance of protecting vulnerable consumers of financial products, and said the government is “advancing changes” designed to improve consumer protection for credit and rental contracts. small amounts.
“Our response to the review of small credit contract laws supported the vast majority of the review’s recommendations, including caps on fees and borrowing amounts,” Sukkar said.
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He said the government is currently considering public submissions to the consultation on SACC and consumer lease reforms following the review, but is “committed to pushing forward these important reforms that will ultimately improve. account the responsibility of issuers of financial products and will improve outcomes for consumers “.
“We recognize the need for reforms in these areas and that reforms must strike the right balance to strengthen consumer protection, while ensuring that these products and services can continue to play an important role in the economy,” Sukkar said. .
Brody said the government said it was pushing reform forward “over the past three years.”
Labor financial services shadow Stephen Jones said it had been more than a thousand days since the government promised to take action on payday lending, and accused the government of burying the legislation.
“They are the champions of payday lenders and have no interest in advocating for vulnerable consumers,” Jones said.
“Shady lenders continue to take advantage of vulnerable Australians … and Labor makes no apologies for holding the government to account for their inaction.”
The government’s proposed legislation would introduce a cap on total consumer lease payments and legislate to ensure that no more than 10% of a consumer’s income is spent on loan repayments.
Last year it was reported that a handful of MPs were leading a revolt against the laws, arguing they were going too far.
The national deputy
George Christensen was one of those who opposed the crackdown, saying the industry played an important role for those who were “desperate” for financial aid.
The Institute of Public Affairs, the National Credit Providers Association and the Consumer Household Equipment Rental Providers Association have pressured the government not to support the changes.
When Morrison was asked in Parliament last year about his support for the alleged MPs revolt, the then treasurer said the story was “false.”
“This government is very concerned about the impacts of low-income people to ensure that they do not find themselves in greater difficulty,” he said.