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CDR Sectoral Assessment for the Open Finance Sector – Non Bank Lending

Submission to: Treasury
Joint consumer group submission (led by Financial Rights) into the application of the Consumer Data Right (CDR) to non-bank lenders. Non bank lenders include consumer lease providers, payday lenders, BNPL providers, wage advance companies and others. Extending the CDR to these companies would allow these businesses to circumvent the credit reporting regime and facilitate targeting of high cost finance to people in hardship. We are extremely concerned that the paper does not adequately consider these risks. We recommend a series of reforms including limiting CDR to companies that are part of the comprehensive credit reporting regime and an opt-in consent for jointly held accounts.

Inquiry into Buy-Now-Pay-Later (BNPL) Providers

Submission to: US Consumer Financial Protection Bureau
Joint submission with Consumer Action, to the United States Consumer Financial Protection Bureau, who like regulators in the United Kingdom, are examining the BNPL industry and the regulatory framework applying to it. BNPL is effectively an Australian invention (via Afterpay) so we are well placed to comment on its impact. The submission makes the point that the Australian Government has so far taken a hands-off approach, relying on industry self-regulation. As a result, a proportion of people are being harmed by the BNPL product. Given that many of the same players operate in both Australia and the US, we recommend that US legislatures introduce adequate safeguards so that BNPL is provided safely.

Review of the Privacy (Credit Reporting) Code 2014 (Version 2.1)

Submission to: Office of the Australian Information Commissioner
Joint consumer submission (led by Financial Rights Legal Centre) contains numerous recommendations to improve the current code. As currently drafted it is impenetrable and needs to be rewritten in simpler and clearer language. We recommend that it be broken up into principles-based consumer provisions and technical industry-facing provisions. There is so much wrong with the Code, that it is difficult to summarise the over 40 recommendations. They cover statute barred debt, family violence, the code oversight body, better timeframes, free credit reports, improving the corrections process and the perverse situation where shopping around for a credit product adversely affects a credit report.

Modernising Registry Fees Consultation Paper

Submission to: Treasury
This submission from FCA and the State/Territory financial counselling associations supports the removal of digital retail search fees, such as those to access details about a company such as the names of directors. In a digital age, the cost of these searches is extremely low, and the public benefits would outweigh these costs. Financial counsellors are increasingly helping clients who operate small businesses and agencies cannot afford the costs of these searches. Some clients are not sure if they are directors or not and financial counsellors also assist people who have been coerced into becoming a director. If the Government does not decide to make these searches free, we recommend that financial counsellors are exempted from having to pay these costs. There is already a precedent, with journalists for example, having free access.

Relief for simple arrangements following a hardship notice

Submission to: ASIC re Consultation Paper 354
Joint consumer group submission (led by Financial Rights Legal Centre) arguing that ASIC should allow Class Order 14/41 to expire in March 2022. The effect of the class order is that credit providers that agree to vary a contract because a person is experiencing financial hardship do not need to notify the person in writing, as long as the arrangement is for less than 90 days (described as a “simple arrangement”). The submission argues that the continuation of the class order will be confusing because of changes to the credit reporting system that require notification to people about financial hardship reporting as well as changes to industry practice.

United Kingdom Consultation on the Buy Now, Pay Later industry

Submission to: HM Treasury, UK
Joint submission from the Consumer Action Law Centre and FCA to HM Treasury in the United Kingdom. The purpose is to share our experience of the Australian regulatory environment, where BNPL operates outside the credit laws that apply to other lending products. This is a similar situation to that in the UK. A key difference in Australia is that the industry here has developed a self-regulatory Code of Practice. The submission outlines the deficiencies with the Code and why it is not an substitute for adequate regulation, includes some observations about other aspects of the operation of BNPL in Australia and makes suggestions about the design of proportionate regulation. The submission is informed by the casework experiences of financial counsellors (called debt advisors in the UK) and consumer lawyers who are increasingly seeing clients who are experiencing various forms of harm when using the product.

Review of the Privacy Act

Submission to: Attorney General’s Department
Joint submission from Financial Rights and FCA (Financial Rights as the lead author) responding to an October 2021 discussion paper from the Attorney-General’s Department considering the scope of the Privacy Act and if its enforcement mechanisms remain fit for purpose. The submission supports proposed amendments to the definition of personal information. The submission argues that the exemption for small businesses from the Privacy Act should be removed including that the Act apply to the new category of “trusted advisors” for the purposes of the consumer data right. (Financial counsellors are trusted advisors.) The submission also argues for the consent provisions to be strengthened, that pro-privacy default settings be enabled by default and that there should be a right to erasure. Complaints handling should be undertaken by the creation of a new body, a Federal Privacy Ombudsman.

Inquiry into corporations’ treatment of Indigenous Australians by the Federal Parliament’s Standing Committee on Indigenous Affairs – joint submission

Submission to: Standing Committee on Indigenous Affairs
This is a joint submission to the House of Representatives Standing Committee on Indigenous Affairs Inquiry into corporate engagement with Indigenous consumers. We outline areas where corporations can improve how they work with First Nations people and communities including examples of best practice in a number of areas.

Regional Banking

Submission to: Regional Banking Taskforce, Treasury
Joint consumer group submission (led by Choice) responding to a consultation on regional banking. The submission recommends that banks commit to a moratorium on branch closures, that in towns with limited or no banking services the banking industry commit to expanding mobile banking and that every town in Australia has at least one fee-free option to withdraw cash. The Taskforce is also encouraged to meet with First Nations communities to understand the particular issues they face.

Compensation Scheme of Last Resort and Financial Accountability Regime

Submission to: Senate Economics Legislation Committee
Joint consumer group submission (led by CHOICE) on the CLSR and FAR. The submission again makes the argument that the scope of the CSLR needs to be expanded to include all financial products that fall under the jurisdiction of AFCA, including funeral expenses policies and managed investment schemes as well as all court and tribunal decisions. The compensation cap for the scheme should be at the same level as AFCA. The FAR needs to extend to executives and senior managers, there must be meaningful consequences for people who break the law, all variable remuneration should be subject to clawback not just a portion and there should be a requirement for executives and senior managers to treat customers fairly.

ePayments Code Review

Submission to: ASIC
Joint consumer group submission (led by the Consumers’ Federation of Australia) on proposed changes to the ePayments Code. Our submission expresses disappointment that ASIC is planning to reduce consumer protection in relation to scams both in relation to mistaken payments and unauthorised transactions. These proposals run counter to ASIC’s 2021-25 strategic plan which include a commitment to reduce the risk of harm to consumers from scams.

Financial Accountability Regime

Submission to: Treasury
Joint consumer group submission (led by CHOICE) on the Financial Accountability Regime Bill 2021. As drafted, the law will not work to hold finance executives to account. The Bill needs to be strengthened to: expand the scope to senior managers, reinstate civil penalties for breaches (which was the Government’s original intention), bolster the deferred remuneration obligations so that all variable rem could be clawed back and impose an obligation on executives and senior managers to treat customers fairly.
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