bigdog
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Credit and financial services targeted at Australians at risk of financial hardship
22 February 2019
View the report as a single document -
https://www.aph.gov.au/Parliamentar...nate/Economics/Creditfinancialservices/Report
Recommendations
Recommendation 1
1.12 The committee recommends that the government should have a strategy to
raise the incomes of low income Australians. This strategy should, at a minimum,
include protecting penalty rates and reviewing the adequacy of government
payments including Newstart.
Recommendation 2
1.21 The committee recommends that the National Consumer Credit Protection
Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill
2017 exposure draft released by Treasury be introduced, and passage facilitated
by the government.
Recommendation 3
1.29 The committee recommends that the government provide additional
funding to strengthen the capability of the Australian Securities and Investments
Commission to police the small and medium credit contract sector and consumer
leasing sector.
Recommendation 4
1.30 The committee recommends that the Australian Securities and
Investments Commission, the Australian Competition and Consumer
Commission and the Australian Financial Complaints Authority undertake a
review to assess what systems and mechanisms would counteract the chronic
underreporting of malpractice and how best to allow consumers to make
complaints about the behaviour of consumer lease and payday lending providers.
Recommendation 5
1.35 The committee recommends that Treasury undertake a review to identify
necessary reforms to regulatory arrangements for medium amount credit
contract products.
Recommendation 6
1.37 The government should implement Recommendation 1.7 of the Royal
Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry removing point of sale exemptions from the National Consumer
Credit Protection Act 2009.
Recommendation 7
1.41 The committee recommends that the National Consumer Credit Protection
Act 2009 be amended to contain strong anti-avoidance provisions that are
capable of capturing both new, emergent credit-like products, and attempts to
disguise the nature of existing credit products.
Recommendation 8
1.54 The committee recommends that the government implement a regulatory
framework for all credit and debt management, repair and negotiation activities
that are not currently licensed by the Australian Financial Security Authority,
including:
• compulsory membership of the Australian Financial Complaints Authority,
giving clients access to an External Dispute Resolution scheme;
• strict licensing or authorisation by the Australian Securities and
Investments Commission or the Australian Financial Security Authority;
• prohibition of upfront fees for service;
• prescribed scale of costs;
• an obligation to act in the best interests of their clients; and
• banning unsolicited sales.
Recommendation 9
1.65 The committee recommends that the government consider, in consultation
with the Australian Securities and Investments Commission, consumers and
industry, what regulatory framework would be appropriate for the buy now pay
later sector. This regulation should ensure that:
• before credit is extended, providers appropriately consider consumers'
personal financial situations;
• consumers have access to internal and external dispute resolution
mechanisms;
• providers offer hardship provisions;
• products are affordable and offer value for money; and
• consumers are properly informed, prior to entering into agreements, about
their terms and conditions.
Recommendation 10
1.66 The committee recommends that the buy now pay later sector develop an
industry code of practice.
Recommendation 11
1.68 The committee recommends that product intervention power currently
proposed in the Treasury Laws Amendment (Design and Distribution
Obligations and Product Intervention Powers) Bill 2018 legislation be extended
to cover buy now pay later products.
Recommendation 12
1.73 The committee recommends that the Australian Securities and
Investments Commission review how financial products and services (including
credit) are advertised and issue an updated regulatory guide to how credit
products interact with consumers in an online environment.
Recommendation 13
1.82 The committee recommends that Centrepay should only be available to
entities that can demonstrate historic and ongoing compliance with relevant
regulations, and that provide products at a fair price and in a fair manner.
Recommendation 14
1.85 The committee recommends that the Department of Human Services
develop the capability to review Centrepay data to identify clients who are at risk
of serious financial hardship and develop appropriate interventions, such as
referral to a financial counsellor.
Recommendation 15
1.93 The committee recommends that the government increase the funding
available to financial counselling organisations to enable a substantial increase in
the number of full time employed financial counsellors across the country. The
funding should be directed to ensure there are sufficient financial counsellors
available in areas of need, including regional Australia.
Recommendation 16
1.94 The committee recommends that the government increase the funding
available to community and financial rights legal centres.
Recommendation 17
1.99 The committee recommends that future tenders for financial counselling
be conducted in a manner and to a timetable that gives service providers
confidence in the outcome, and allows them to continue their work without
significant disruption.
Recommendation 18
1.104 The committee recommends that the government consider what tax and
other incentives could be used to encourage mainstream credit providers to offer
low interest products to vulnerable Australians.
Recommendation 19
1.105 The committee recommends that the No Income Loans Schemes and
Step-Up grant programs should be expanded, with longer funding cycles that are
aligned to the other grants in the Department of Social Services Financial
Wellbeing and Capability funding stream.
Recommendation 20
1.106 The committee recommends that the government should actively promote
the No Income Loans Schemes and Step Up programs through Centrelink
offices, and other forums where there is contact with people at risk of financial
hardship. The government should also consider whether information regarding
these programs should be included alongside the information regarding the debt
helpline on bills and other documents.
22 February 2019
View the report as a single document -
https://www.aph.gov.au/Parliamentar...nate/Economics/Creditfinancialservices/Report
Recommendations
Recommendation 1
1.12 The committee recommends that the government should have a strategy to
raise the incomes of low income Australians. This strategy should, at a minimum,
include protecting penalty rates and reviewing the adequacy of government
payments including Newstart.
Recommendation 2
1.21 The committee recommends that the National Consumer Credit Protection
Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill
2017 exposure draft released by Treasury be introduced, and passage facilitated
by the government.
Recommendation 3
1.29 The committee recommends that the government provide additional
funding to strengthen the capability of the Australian Securities and Investments
Commission to police the small and medium credit contract sector and consumer
leasing sector.
Recommendation 4
1.30 The committee recommends that the Australian Securities and
Investments Commission, the Australian Competition and Consumer
Commission and the Australian Financial Complaints Authority undertake a
review to assess what systems and mechanisms would counteract the chronic
underreporting of malpractice and how best to allow consumers to make
complaints about the behaviour of consumer lease and payday lending providers.
Recommendation 5
1.35 The committee recommends that Treasury undertake a review to identify
necessary reforms to regulatory arrangements for medium amount credit
contract products.
Recommendation 6
1.37 The government should implement Recommendation 1.7 of the Royal
Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry removing point of sale exemptions from the National Consumer
Credit Protection Act 2009.
Recommendation 7
1.41 The committee recommends that the National Consumer Credit Protection
Act 2009 be amended to contain strong anti-avoidance provisions that are
capable of capturing both new, emergent credit-like products, and attempts to
disguise the nature of existing credit products.
Recommendation 8
1.54 The committee recommends that the government implement a regulatory
framework for all credit and debt management, repair and negotiation activities
that are not currently licensed by the Australian Financial Security Authority,
including:
• compulsory membership of the Australian Financial Complaints Authority,
giving clients access to an External Dispute Resolution scheme;
• strict licensing or authorisation by the Australian Securities and
Investments Commission or the Australian Financial Security Authority;
• prohibition of upfront fees for service;
• prescribed scale of costs;
• an obligation to act in the best interests of their clients; and
• banning unsolicited sales.
Recommendation 9
1.65 The committee recommends that the government consider, in consultation
with the Australian Securities and Investments Commission, consumers and
industry, what regulatory framework would be appropriate for the buy now pay
later sector. This regulation should ensure that:
• before credit is extended, providers appropriately consider consumers'
personal financial situations;
• consumers have access to internal and external dispute resolution
mechanisms;
• providers offer hardship provisions;
• products are affordable and offer value for money; and
• consumers are properly informed, prior to entering into agreements, about
their terms and conditions.
Recommendation 10
1.66 The committee recommends that the buy now pay later sector develop an
industry code of practice.
Recommendation 11
1.68 The committee recommends that product intervention power currently
proposed in the Treasury Laws Amendment (Design and Distribution
Obligations and Product Intervention Powers) Bill 2018 legislation be extended
to cover buy now pay later products.
Recommendation 12
1.73 The committee recommends that the Australian Securities and
Investments Commission review how financial products and services (including
credit) are advertised and issue an updated regulatory guide to how credit
products interact with consumers in an online environment.
Recommendation 13
1.82 The committee recommends that Centrepay should only be available to
entities that can demonstrate historic and ongoing compliance with relevant
regulations, and that provide products at a fair price and in a fair manner.
Recommendation 14
1.85 The committee recommends that the Department of Human Services
develop the capability to review Centrepay data to identify clients who are at risk
of serious financial hardship and develop appropriate interventions, such as
referral to a financial counsellor.
Recommendation 15
1.93 The committee recommends that the government increase the funding
available to financial counselling organisations to enable a substantial increase in
the number of full time employed financial counsellors across the country. The
funding should be directed to ensure there are sufficient financial counsellors
available in areas of need, including regional Australia.
Recommendation 16
1.94 The committee recommends that the government increase the funding
available to community and financial rights legal centres.
Recommendation 17
1.99 The committee recommends that future tenders for financial counselling
be conducted in a manner and to a timetable that gives service providers
confidence in the outcome, and allows them to continue their work without
significant disruption.
Recommendation 18
1.104 The committee recommends that the government consider what tax and
other incentives could be used to encourage mainstream credit providers to offer
low interest products to vulnerable Australians.
Recommendation 19
1.105 The committee recommends that the No Income Loans Schemes and
Step-Up grant programs should be expanded, with longer funding cycles that are
aligned to the other grants in the Department of Social Services Financial
Wellbeing and Capability funding stream.
Recommendation 20
1.106 The committee recommends that the government should actively promote
the No Income Loans Schemes and Step Up programs through Centrelink
offices, and other forums where there is contact with people at risk of financial
hardship. The government should also consider whether information regarding
these programs should be included alongside the information regarding the debt
helpline on bills and other documents.
