A lot is being said and written about the final report of the Banking Royal Commission.
We focus on three issues relevant to our work.
The final report has a lot of helpful recommendations
- We endorse the comments made about the report by our colleagues in other consumer organisations: the Consumer Action Law Centre; the Financial Rights Legal Centre; Choice and the Consumer Credit Legal Service WA. Many of the recommendations made by Commissioner Hayne, if properly implemented, will lead to a fairer and simpler financial system. Current loopholes in the laws will be closed, conflicts of interest addressed, regulators will have more powers and will be held to account to use them.
We remain concerned about irresponsible lending
- We continue to be concerned about the debt overhang from past over-lending by financial service entities. This has not been adequately addressed in the final report. There are thousands of Australians who have been lent money that they struggle to repay. For example, a recent ASIC report found that nearly two million Australians have various forms of problem credit card debt.
It is a misnomer for commentators to talk about a “credit crunch” when all that we are seeing is an appropriate focus on responsible lending. This focus needs to continue across the board and extend to businesses that were outside the Royal Commission’s gaze, including payday lenders, rent-to-buy companies and new credit providers who offer “buy now-pay later” arrangements. The harm caused by these companies continues to be reflected in financial counselling casework.
We welcome the Royal Commission’s acknowledgement of the important role of financial counsellors and consumer credit lawyers
- We are delighted that the important work done by financial counsellors and consumer credit lawyers has been explicitly recognised by the Royal Commission. Commissioner Hayne notes that there is an imbalance of power between consumers and financial services entities. In our complex financial system, people frequently cannot access remedies or understand their rights without the assistance of free and independent financial counsellors and consumer lawyers.
We welcome the Government’s announcement of an immediate review of the coordination and funding of financial counselling services. We look forward to working with the Minister and his Department to deliver a sustainable funding base that will provide essential free and independent debt advice services to people in financial stress across Australia.
One funding option that needs to be in the mix is an industry levy. Financial firms set out to make a profit from lending and should clearly bear some of the cost of financial counselling services. Utility and telco companies should also contribute because they too benefit from referring their customers to financial counsellors.
Media contact: Fiona Guthrie, CEO, 0402 426 835