Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

On behalf of the Joint Committee on Corporations and Financial Services, I present the committee's report, entitled Inquiry into Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, incorporating additional comments together with evidence received by the committee.

In accordance with standing order 39(f) the report was made a parliamentary paper.

On 22 September last year the House referred the Parliamentary Joint Committee on Corporations and Financial Services an inquiry into the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011. The committee's report was presented to the Speaker out of session on 2 December last year. As chair of that committee I am pleased now to be able to table the report here in the House. The bill furthers the government's commitment and good work, as well as the resolution of the Council of Australian Governments to introduce a national system of consumer credit regulation—something that has been due and waited for in this country for a very long time. COAG agreed that the new consumer credit system would address areas of concern with the operation of state and territory consumer credit laws and this bill does exactly that. It delivers on the commitment that Labor made to ensure that there was national, state and territorial consistency on consumer credit.

The bill proposes a new approach to the regulation of reverse mortgages, consumer leases and short-term lending, colloquially known as 'payday lending'. The bill also contains measures to assist borrowers to vary repayments under a credit contract in circumstances of financial hardship. In addition the bill introduces remedies for unfair and dishonest conduct on the part of creditors. The committee agrees that improvements are needed to address concerns with the regulation of these areas of consumer credit law and the government has worked hard to ensure that we have the best options put forward. The committee considers that the measures proposed further the objects of consumer protection and fully-informed market participation. However, in the course of the inquiry the committee identified areas where the operation of the proposed consumer credit laws could be further strengthened. To this end the committee has made 14 recommendations.

Much of the public debate regarding the bill has focused on the regulation of short-term loans in particular. It is to this matter that I draw the House's attention. The committee understands that the reforms are intended to balance consumer protection with the continued viability of the short-term lending sector, an industry which provides a valuable service to the community. The bill recognises that more can be done to protect consumers accessing short-term loans, but evidence presented to the committee was not conclusive that the measures proposed are the best means of securing necessary consumer protections while at the same time maintaining a viable short-term loan industry. The government has taken note of this and is working to ensure that we get the balance right between protecting consumers and making sure that an industry continues to survive. Accordingly, the committee recommends that the government undertake further consultation on the proposed regulation of short-term loans.

In conducting the inquiry, the committee received 53 submissions and it held one public hearing, during which the committee heard from 19 different organisations. I want to express my thanks for the good work of the committee secretariat and acknowledge the continuing hard work of all the committee members, and particularly the deputy chair, Senator Sue Boyce, and all of those who participated.

This inquiry was important because it did look at a particular area of consumer credit that is controversial. There no question about that. People have differing views across differing jurisdictions, particularly when we refer to payday lending. Generally, it would be accepted by most people that it has a bad name and there certainly are some players in that sector of the market that do the wrong thing. That is less and less becoming the case, and with better regulation we will find we have a properly regulated, properly managed and professional sector that can provide a service for a gap in the market for people who find themselves in need of a short-term, small-amount loan. If it is done properly, if it is regulated properly and if consumer protections are in place, then both can coexist: consumers can have access to a service and access to credit and they can be protected against unscrupulous operators, and we will still have a viable sector. That was the intent of the committee of inquiry and of the work of all the committee members. I commend the report to the House.

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