Joint Consumer Group Submission

Review of Retails Payments Regulation

Submission to: Reserve Bank of Australia
Joint consumer group submission (led by Choice). We argue that Buy Now Pay Later providers are not playing by the same rules as other merchants and this imposes costs on all consumers. We also welcome the RBA's intervention to coordinate regulatory and industry action in relation to managing direct debits and recurring payments. It is ludicrous that consumers still have difficulty in cancelling these deductions.

Consumer Advocacy Body for Superannuation

Submission to: Treasury
Joint consumer group submission supporting the proposal for permanent consumer advocacy body in superannuation. We recommend that Super Consumers Australia be this independent voice.

Removal of the exemption for funeral expenses policies– Exposure draft legislation

Submission to: Treasury (Financial Services Reform Taskforce)
This package of draft legislation is a direct response to the Financial Services Royal Commission. The draft bills remove the current exemptions for funeral expenses policies from the licensing and conduct regime in the Corporations Act. We also argue that other exemptions for funeral insurance should also be removed from the Life Insurance Act and the Insurance Contracts Act. The submission supports the commencement date of 1 April 2020. The submission also raises concerns about the impact on Aboriginal and Torres Strait policy holders of funeral insurance company ABCF. If this company does not obtain a licence under the new regime, a compensation/redress scheme will be needed for these policy holders. They should not face the loss of past contributions and no future coverage for the costs of their funerals, because of a past legal loopholes and poor drafting.

Joint consumer submission (Consumer Action, Financial Rights, FCA and Choice) – Exposure Draft consultation on the Corporations Amendment (Design and Distribution Obligations) Regulations 2019

Submission to: Financial Services Reform Taskforce, Treasury
We support DADOs applying as broadly as possible to reduce the number of loopholes in the law (a problem called out in the Financial Services Royal Commission). For example, DADOs should apply to buy now, pay later products. This submission supports the extension of DADOs to basic bank accounts. We argue that proposed exclusions for credit provided for business purposes and pawnbrokers should be removed, so that they are also included in the regime.

Joint consumer submission – mortgage broker best interests duty and remuneration reforms

Submission to: Treasury
The broking industry needs wholesale reform if it is to act in the best interests of people taking out home loans. We support the imposition of a best interests duty, which should be expanded to all financial products, and the requirement to prioritise needs. There need to be stronger penalties for misconduct, the establishment of record keeping obligations and the loophole about the way a broker is defined needs to be closed. The root cause of so many problems in the mortgage broking industry is remuneration and wholesale reform is needed in this area: removing volume-based and campaign-based commissions, banning non-volume based bonuses, a prohibition on recommending excessive mortgages, ensuring that clawback arrangements encourage switching, defining conflicted remuneration, ensuring that IT software and support systems deliver fair results and ensuring that education and training events are genuine. These reforms would be pro-competitive so that brokers would be forced to scan the market and help people find a loan that best suits their needs. Although the prohibition of upfront and trail commissions are not within the scope of this proposed legislation, the consumer movement reiterates its support for these recommendations from the Financial Services Royal Commission.

Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia

Submission to: Senate Community Affairs References Committee
This is a joint submission from FCA and the State/Territory financial counselling associations. Fairness should be the underpinning principle in decisions about the level of income support payments. We support an urgent increase in Newstart by at least $75 per week to ensure people are more likely to be able to keep a roof over their heads and pay the household bills. We support an independent review of the adequacy of income support payments and the introduction of an independent body to set such payments to ensure they remain adequate into the future.

NCCP Amendment (Mandatory Comprehensive Credit Reporting) Bill

Submission to: Treasury
This joint consumer group submission responds to proposed legislation to include hardship flags in credit reports. We have long opposed this approach. The submission argues that proposed retention timeframes are too long, that hardship flags should only be visible to credit providers that are making responsible lending assessments and that hardship information should not be incorporated into credit scores.
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