Why you should care about responsible lending laws

Money
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Hi All, I moved a short sub-discussion about credit cards and retirees to a prior topic about it, click here to get there.

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The Consumer Action Law centre is holding a briefing regarding responsible lending laws on Wednesday 21.10.2020 between 3:30 PM and 4:30 PM.

View this email in your browser

Sector briefing: responsible lending laws

Hi XXXX,

Next week we’re hosting a briefing session on the campaign to protect our responsible lending laws.

The briefing is specifically being held for community and legal aid lawyers, financial counsellors, and community workers who are interested in getting involved with the campaign.

Date: Wednesday 21 October
Time: 3.30pm - 4.30pm AEDT
Where: we’ll send you an email with details for the Zoom meeting

CLICK HERE TO REGISTER

During the briefing, we’ll cover:

  • What are our responsible lending laws
  • What exactly is being proposed
  • How it will impact the most marginalised people in our community
  • What we can do to protect the laws

Once you’ve registered, we’ll be sure to follow up with the details for the Zoom meeting ahead of the briefing.

If you have any questions, please feel free to contact Alycia Gawthorne, Campaigns & Advocacy Adviser at alycia@consumeraction.org.au.

We hope to see you there!

Consumer Action is based on the land of the Traditional Owners, the people of the Kulin Nations. We acknowledge their history, culture and Elders both past and present.
You are receiving this email because you opted into receive information about the latest news and campaigns from Consumer Action Law Centre.

If you do not wish to be sent information about our latest news and events, you can update your preferences or unsubscribe from this list.

Consumer Action Law Centre

Level 6, 179 Queen Street

Melbourne, Victoria 3000

Australia

Add us to your address book

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Another article regarding the proposed changes to lending laws and the feedback from the Consumer Action Law Centre.

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This is the kind of reporting by Choice which is appallingly one-sided. The GFC was caused by hybrid securities in the USA and the selling of such junk loan securities, not by the bad lending itself. It wasn’t related to Australia at all, so saying “it was irresponsible lending behaviour like this that led to the global financial crisis (GFC)” is somewhere between a gross distortion and an outright lie.

A guy who fell for a scam applied for a loan and has a house, which means he can afford to service it (yes, that may mean he has to sell) and because of cases such as that every person in Australia who wants credit must jump through ever-tighter hoops? It’s ludicrous.

For every one person like him, the effect of the nanny-state legislation that we’ve been burdened with recently is that thousands of responsible people are regularly denied finance because banks are forced to make ludicrous worst-case assumptions about the credit-worthiness of their clients.

Banks are very reluctant to provide bridging finance when a person is moving house, even when the old property clearly covers the value of the new. They calculate your worthiness for a new credit card on the basis that you have maxed out all your other cards, even if you never do that. Protecting a few people who are foolish or have brain injuries is a nice ideal, but not when it ruins the lending market for everyone else in the process.

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Actually, @craig1, it WAS irresponsible lending by US lenders for property that lead, through selling off mortgages into “wall street bank” products like CDOs, that lead to the collapse in 2008.
We didn’t suffer much in Australia because at the time that sort of US lending and hiving off into synthetic products had not really started in Aus. There were some lenders out there outside the traditional bank lenders that went right out of business when their cost of wholesale borrowing dramatically increased.

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Half your sentence tries to defend the distortion and then you put in the truth: “through selling off mortgages into “wall street bank” products like CDOs”
i.e. It was a combination of things and none of it in Australia and leaving both of those facts out is outright distortion at best.

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Isn’t the focus of this topic captured by this?

As a nation we can only spend and consume what we can afford. Those with the least income and many other consumers need access to credit on fair terms.

Unfortunately the marketing of financial products can be highly profitable to the detriment of the borrowers. Many of those promoting the products have no concern for the moral, or longer term financial outcomes for the nation as a whole. Personal finance seems a lot like a game of Survivor at times, ‘Outwit, out
’ ?

Doesn’t Choice have a commitment to stand up for the consumer members? If political decisions are being made that will lead to poor consumer outcomes it needs a response to the politicians of the day.

The GFC is so 2008. Valuable lessons on what not to do with subprime lending, or building a house of cards based on inappropriate financing practices.

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Let’s first isolate ‘bad lending’ from other aspects to keep it non-political and non-partisan.

Sub-prime lending is a big business. It targets those who can not afford a loan or can marginally service one should they get one. The smallest blip on their financial circumstances puts them into default, triggering anything from repossessions to bankruptcies.

While there is a certain truth about over reaching laws, and reality is not everyone can be protected from themselves, the advertising slogan of ‘get the credit you deserve’ seems to have started in the US but came into use here now and then. It set up those who probably should not have been given credit, or much credit, expectations beyond their means, leading to some unscrupulous brokers and companies signing that demographic up for all they could.

There is a reason usurers are vilified throughout much of modern history. Manipulation for money is their sole raison d’etat, be it lending or gambling on [name it, including shares].

Because of tax laws if a house is repossessed the bank is usually not in the real estate business, so they off load it ASAP leaving any gap to be paid by the defaulted borrower. As that becomes more widespread in a community it floods the market and drives prices down. But that is another aspect.

Should government intervene? I side with those who think so, but by changing tax laws to make it more profitable for lenders to work with their defaulting borrowers, not to make it more profitable for them to ruin them.

As the relationships to the GFC, when the financial community overwhelmingly ‘invests’ into marginal, risky, and often speculative vehicles and those markets plunge, it triggers events.

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Another article regarding winding back responsible lending laws.

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We know that removing these laws will hurt people

  • CHOICE CEO Alan Kirkland

Consumer groups issue an open letter calling on parliamentarians to protect safe lending laws:

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From the latest Consumer Action Law Centre newsletter.

Welcome to our eNewsletter for March which is a very brief snapshot of what we have been doing in the last couple of months. It’s been a very busy introduction to the year.

The nationwide campaign to Save Safe Lending has been a major focus. Working with an array of partners, we are fighting to stop the scrapping of the responsible lending laws. As the Bill makes it journey to the Senate, we have a chance of stopping it from becoming law.

This legislation flies in the face of the Financial Services Royal Commission Final Report, which recommended that responsible lending laws remain intact. Instead, the Federal Government is attempting to axe these laws with a view to spending our way out of the COVID crisis. This is a short-sighted ‘fix’ that will have terrible long-term consequences for many people.

Consumer protections need to be strengthened, not eroded. That was my main message when I spoke with colleagues in Canberra at the Senate Inquiry into the potential impact of the proposals: Take a look at the video. I think we can be very proud that consumer advocates and campaign supporters have made it clear through our submissions to parliamentarians, our media stories and advocacy, that the consequences of the changes would be disastrous, especially for those at most at risk from irresponsible lending.

The stories of unaffordable debt and suffering this can bring to individuals and families have been compelling. These stories have cut-through above the everyday media hum, and are getting into a number speeches from supportive MPs. We wish to acknowledge the bravery of our clients and others who have shared their stories of unaffordable debt as part of the campaign.

–Gerard Brody, CEO

Submission
Stop the Debt Trap Alliance: National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020

Latest News


Responsible lending: Taking the fight to Canberra

On 19 February 2021, Gerard Brody was among a group of consumer advocates who gave evidence to a Senate Committee investigating the proposed changes to the responsible lending laws. He remained cool and calm under some tough questioning from some members of the panel.
Watch Gerard in action


Every day our FC’s help clients affected by (ir)responsible lending, or debt exacerbated by buy-now-pay-later loans and other credit products. Our FCs often talk about their experiences in print, radio and TV. Read more. Watch more. And listen to FC Sarah explaining advice on debt on SBS Radio’s Punjabi news.

Contact the National Debt Helpline

Opinion: Responsible lending law repeal will undo good

An opinion piece by Gerard Brody

Read more


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Their Submissions from the Newsletter links that might make it easier to read their concerns. The second pdf linked is probably the most comprehensive reasoning of them all.

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The latest advice from Choice.

Hi XXXX,

It’s on. The government is planning to rush through its disastrous legislation to axe safe lending laws next week. If that happens, we will be faced with a debt disaster that will hurt people, damage the economic recovery and go against the very first recommendation of the banking royal commission.

The only people standing in their way are five important crossbench senators. That’s where you come in, Peter. We know that the government is lobbying senators to influence their votes, so now is the time to make sure our voices are heard.

The more people senators hear from, the more pressure they will feel to block this legislation. We know that contacting them on social media right now is the most effective thing we can do to keep this issue on their radars. Will you make your voice heard to your senator?

Tell senators why they should save safe lending laws

Here are some quick tips:

  • Either contact the senators in your area, or one or more of your choice – anyone can participate no matter where you live
  • Feel free to use the pre-written tweet, or personalise it by sharing why safe lending laws matter to you
  • You may also wish to share a personal experience of reckless lending
  • Remember to be respectful and only write you’re comfortable sharing – your message is public

Contact senators in South Australia:

Contact senators in Tassie:

Contact senators in Queensland:

Not on social media? No problem! Why not forward this email to a friend?

I’m headed to Canberra next week to do everything we can to save safe lending laws. I’ll be in touch again when we have another update.

Thanks for your ongoing support,

Patrick Veyret
CHOICE

And another article.

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Pretty sure i received several replies back in regards to the bank reform. Still doesn’t mean they will do anything. Unless it is just an automatic reply to say it has been received. Havnt heard anything since the last emails.

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Latest update from Choice.

Hi XXXX,

Thanks to CHOICE supporters like you, our ads calling on senators to save safe lending laws have been published today in The Australian, The Adelaide Advertiser and The Courier Mail today. And the timing couldn’t be better.

The government is trying to rush its plans to axe safe lending laws through Parliament this week . I’m in Canberra to hold final meetings with key senators to show them the ads in the newspapers and deliver the open letter signed by over 33,000 people and 125 community organisations.

A number of senators still haven’t made their positions public, so it’s crucial we keep up the pressure right to the end.

Check out the ad on page 9 of The Australian:

If you see the ads today, we’d love to share your photos online so senators see them! Simply hold up the paper like this, grab a quick snap, attach your photo and send to campaigns@choice.com.au (or reply to this email), or tweet it out yourself using the hashtag #debtdisaster.

Be sure to keep an eye on your inbox for another update as soon as we know more from Parliament House. We couldn’t do this without you.

Thanks for your ongoing support,

Patrick Veyret
CHOICE

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An article regarding the Tasmanian property market.

"The chief executive of the Real Estate Institute of Tasmania, Mark Berry, said mandatory cooling-off periods would delay sales and add to uncertainty for sellers.

He said previous proposals for mandatory vendor disclosure would have been unnecessarily costly and time-consuming."

“The Tasmanian Law Society also opposed the introduction of mandatory vendor disclosure laws because they would be too onerous and said prospective buyers could protect themselves by getting legal advice before they signed contracts.”

Got to love the vested interests.

And all this without even watering down safe lending laws.

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A group of Academics have looked at the legislation about the changes to loan practices. They reject the Law and they have some interesting points on why it should be rejected among them that APRA is ineffective with “no history of Consumer protection”. That that organisation is a Consumer fail should be of no surprise to anyone here or to those who followed the Royal Commission.

Their final lines on the matter:

" In our assessment the proposed changes fail in every respect.

They ignore the key lesson of the global financial crisis: that it was caused by reckless and predatory lending.

They ignore the findings of the Hayne Commission and other inquiries dating back at least a decade.

They will neither properly protect consumers nor create the confidence in the financial industry the post-COVID recovery will need.

The government has named its legislation the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill.

A more apt title might have been the “Reducing Consumer Protection Bill”."

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The latest update from Choice.

Hi XXXX,

This week the government delayed its plans to rush a vote through the Senate to axe safe lending laws. Now, the legislation will be given more time for scrutiny – but it could be brought back in May.

We know the open letter to save safe lending laws, supported by over 33,000 people like you, is making a real impact. The same day it was delivered to crossbench senators, the government hit the brakes because they knew they don’t have the numbers right now.

In fact, our campaign was mentioned by six different MPs in Parliament this week. This government’s bill has been left with no friends other than lenders that will profit from people’s misfortune if it goes through.

I had meetings with a number of key politicians and advisers who confirmed their opposition to the government’s plans to axe safe lending laws after handing over the open letter signed by tens of thousands of people.

The campaign isn’t over yet, but this development prevents the government from rushing through harmful legislation this week.

Since the government announced its plan, we’ve worked together to defend safe lending laws. Here’s what we’ve achieved since September:

  • Over 33,000 Australians and 125 community organisations signed the open letter to save safe lending laws
  • Thousands of people have emailed senators asking them to defend these crucial consumer protections
  • Over 500 CHOICE supporters chipped in to fund three powerful ads in newspapers calling on senators to oppose the government’s plans
  • Thousands of people shared their stories and support for safe lending, helping #DebtDisaster trend and informing our submission
  • We’ve been in the news consistently to make the case for safe lending

We will continue working closely with key senators from across the political spectrum to ensure that the legislation is blocked in the Senate.

Thank you again for everything you’ve done to support this campaign. I’ll be in touch if there are any further developments, but for now take a well earned rest. You’ve earned it.

Thanks for your ongoing support,

Patrick Veyret
CHOICE

Good on you, Patrick. And right on St Patrick’s day to boot.

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The latest update from the Consumer Action Law Centre.

"XXXX,

Last year, our hearts sank as we woke up to the headline, “Responsible lending laws to be axed”. For those of us who rely on these crucial laws every day to seek justice for our clients, it was a crushing blow.

But when the Treasurer made that announcement on 25 September 2020, he did so with the intention of having them passed and implemented this month – which is why we let out a big sigh of relief when the Senate wrapped up last week with safe lending laws still left to be debated.

This means we can all rest easy for the next few months knowing safe lending laws are still safe (for now)!

This is a massive win and a huge testament to everyone who has worked together to expose the devastating impact of repealing safe lending laws . There’s no doubt these laws would be in effect today had it not been for all of you who wrote to your MP, shared the campaign with your friends, signed onto the open letter, and tweeted your debt disaster story.

To each and every one of you – thank you!

Listening to the debate in the lower house last week, the impact of our advocacy was stark as each MP rose to speak on the harm of unsafe lending. They mentioned the work of organisations around the country from Financial Rights Legal Centre to Hume Riverina CLS, from Anglicare to ACOSS.

They mentioned the Economic Abuse Reference Group when speaking about how safe lending laws help identify cases of financial abuse in situations of family violence. And spoke about the Salvation Army’s experience of people cutting back on meals to prioritise loan repayments.

This is one of the biggest fights the consumer advocacy sector has ever fought – and it’s not over yet.

Over the next few weeks, we’ll be regrouping and adjusting our strategy to make sure senators don’t forget the stories and the reasons why safe lending laws are so crucial. So, if the Bill does make another appearance later this year in the Senate, we’ll be ready!

In the meantime, take some space to rest up and celebrate all we’ve achieved together. It’s infinitely worth celebrating.

Gerard, Katherine, Tom, Alycia, Mark, and Sheena
Consumer Action Law Centre"

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Might not like their policies or views on many things, but appears that they have some common sense


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