National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020
The submission to the Senate Economics Legislation Committee regarding the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 (Cth) (Bill) was prepared by the Law Council of Australia.
It is appreciated that there is a diversity of views in relation to the appropriate balance to be struck when considering the extent to which lending practices are regulated for the purposes of consumer protection. Indeed, the legal profession itself has a notably broad range of opinions as to the appropriateness of existing responsible lending obligations (RLOs).
It is noted that in preparing this submission, the Law Council has relied primarily on the expertise and perspectives of legal practitioners with extensive experience in consumer protection law from a broad range of different practice types, including private legal practice, the independent bar, legal aid, community legal services, legal services in remote and regional communities and academia.
This submission is therefore reflective of the experiences of legal practitioners that represent the interests of consumers, and in particular, individuals and businesses that may be particularly vulnerable should there be relaxation of RLOs, as opposed to other sections of the legal profession, including those that work closely with financial service providers.
The Law Council acknowledges that the reforms are intended to promote the flow of credit in the wake of the COVID-19 pandemic by reducing the time that it takes consumers and businesses to access credit so that consumers can continue to spend, and business can invest and create jobs.1
This is a worthy objective, and the Law Council is supportive of initiatives which will assist in the recovery of the Australian economy from the impacts of the COVID-19 pandemic. However, based on the experiences of legal practitioners representing consumers of financial products involving credit and debt, there are concerns that the potential benefits do not justify the winding back of responsible lending measures at this time.
With this in mind, the Law Council considers that the retention of RLOs is consistent with the recommendations in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission). The permanent changes sought in the Bill cannot be warranted on the basis of being adjustments to respond to the recent exceptional market conditions that have been experienced as a result of the COVID-19 economic crisis.
You can read the full submission below.
1 Explanatory Memorandum, National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 (Cth ) [1.1].