Libby Coker (Corangamite, Australian Labor Party) Share this | Hansard source

The Morrison government has named this bill the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, but this flawed bill does not protect the vulnerable from financial hardship. Instead it exposes them to unscrupulous and predatory behaviour.

Schedule 1 of this amendment removes responsible lending obligations from most consumer credit contracts. In other words, it gets rid of regulations that exist to ensure or safeguard the rights of the client. What is worse is that this bill flies in the face of the first recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Remember, the banking royal commission was established in response to the disgraceful practices of the banking sector, which have led to anxiety, suicide, an escalation in the cost of housing, homelessness, predatory behaviour—the list goes on.

The banking royal commission states that the National Consumer Credit Protection Act should not be altered to lessen the safeguards that ensure responsible lending, and there is very good reason for the inclusion of this recommendation. It serves to enshrine protections in our lending laws to make sure that loans are affordable, suitable and ethical. Importantly, it puts the welfare of the vulnerable front and centre. So why would you remove it? It makes sense. To introduce this legislation shows a lack of compassion and insight into the lives of our most financially vulnerable. The Morrison government says that the removal of such a safeguard is required to free up the ability to get a loan and to stimulate the economy, but borrowings are at an all-time high. So the message is that these safeguards are not an impediment to getting a loan. We don't need to free up the system, and we certainly don't need to expose our most vulnerable Australians to predatory and unscrupulous behaviour.

The Labor government introduced the National Consumer Credit Protection Act in 2009, and there were two key reasons for these responsible lending laws. The first is that irresponsible lending leads to extreme personal hardship. This, sadly, occurs too frequently, at no fault of the borrower. It is often linked to family violence, abuse and other devastating life challenges. The second reason is structural and was in response to the global financial crisis. Irresponsible lending introduces weaknesses into the economic system. These weaknesses can have devastating impact, as we saw with the global financial crisis. Put simply, irresponsible lending generates bad debt. At low incidence, bad debt generates economic drag and lowers prosperity across the country. At moderate to high incidence, bad debt causes economic collapse and decimates prosperity across the country—the exact opposite of what we want during COVID. Even the officials from this government's Treasury department agree. These Treasury experts sat before the banking royal commission and very clearly explained that the laws the government are now trying to cancel serve to protect our economy. The Treasury department submitted this to the banking royal commission:

There is little evidence to suggest that the recent tightening in credit standards, including through APRA's prudential measures or the actions taken by ASIC in respect of RLOs, has materially affected the overall availability of credit.

The department also noted:

… to the extent that firms are correcting lax credit assessment practices, there has likely been an improvement in the credit quality of marginal borrowers.

So, in summary, the government's own department said that credit standards and safeguards had not affected borrowings and had instead improved the integrity of the system—had protected the right of marginal borrowers. So it's incomprehensible to suggest that this draft legislation before the House today would have a positive impact on wellbeing or the prosperity of Australia. It will not.

Two clients of my community law centre, the Barwon Community Legal Service, clearly show the absolute importance of retaining responsible lending requirements. Sally has two children to her de facto partner, John, who had a gambling problem and was very controlling with money. John wanted a new vehicle, but his credit rating was poor and he was unable to get a loan. After several weeks of coercion, including physical and emotional violence, they went to a car dealership and John negotiated a purchase while Sally stayed outside. When it came time to sign the contract, John brought Sally into the store and explained to the car dealer that she would be the borrower, and they proceeded to complete the paperwork, with Sally not asked one more question. That lender issued Sally a $25,000 loan at 20 per cent interest per annum, via its own finance company. The car was registered in John's name and Sally never drove it. Sally only had her learner's permit. After they separated due to the ongoing family violence, John took the vehicle and left Sally with the debt.

Sadly, this government and the PM are introducing this legislation, which will expose vulnerable women like Sally to abuse. It's about time the Prime Minister listened to women. Today the Prime Minister let women down. He did not attend the March 4 Justice. He turned his back. But the Barwon Community Legal Service stepped up. They helped Sally. They argued that the finance provider had breached responsible lending laws by not making inquiries or verifying information despite clear signs of coercion. Eventually, after a complaint to the Australian Financial Complaints Authority, the debt was waived. This waiver would not have been possible and could not have been achieved without the responsible lending laws that this government intends to remove with the bill before this House.

Then there's Ahmed, another client of the Barwon Community Legal Service, who was deep in debt from business and personal loans and was looking for a way out. He signed up for a course with a private college on the promise that he would earn an extra $1,000 a week after completing the qualification. When he couldn't afford course payments, they offered to organise finance for him. Ahmed got a phone call from someone who asked for all his bank statements and other details. The caller, a finance broker connected to the college, applied for a loan on Ahmed's behalf at a rate of 22.9 per cent interest, using extremely inaccurate information. The course wasn't as advertised, and Ahmed was left with a loan of $30,000 to repay, on top of all his other debts. Barwon Community Legal Service stepped in and helped Ahmed make a complaint to the Australian Financial Complaints Authority, on the grounds that both the broker and the lender breached responsible lending laws. Ahmed eventually accepted a settlement from the finance broker. The lender wiped $22,000 of the debt and allowed Ahmed to repay the remainder at a rate he could afford, without interest. Like Sally, Ahmed is extremely thankful that Barwon Community Legal Service was able to advocate on his behalf. Without responsible lending laws, this would not have been possible.

I'd like to take this opportunity to pay tribute to the hugely committed team at Barwon Community Legal Service. The work they've done for Ahmed and Sally and thousands of others across my electorate is beyond commendable. They witness and fight the harm brought about by inappropriate lending practices and other social ills on a daily basis. In the last financial year, Barwon Community Legal Service saved clients over $350,000 in waived, renegotiated or revoked debts arising from breaches of the very legislation this government is rushing to water down. This service runs a tanker ship on the smell of an oily rag and makes our country a better, fairer and more compassionate place. So my heartfelt thanks go to the Barwon Community Legal Service.

The Barwon Community Legal Service bears witness to the harm caused by irresponsible lending. The Treasury has testified to the significant and negative economic impacts of irresponsible lending. But the Morrison government still has the gall to claim this bill will do Australia and the Australian economy good. What absolute rubbish! It will not. This bill scraps responsible lending obligations and exposes customers and the economic system to huge risk, and this bill is in direct contradiction to the banking royal commission recommendations. It makes absolutely no sense.

Labor does not support this bill, which will harm Australians and the Australian economy. We say no to any effort to strip back responsible lending. We say no to the Morrison government on this legislation. Instead, we stand with Treasury and community legal services, we stand for the banking royal commission recommendations and we stand with Sally and Ahmed and every Australian who relies on every MP in this chamber to do the right and the decent thing and protect them from harmful, irresponsible lending practices. It's time the Morrison government stepped up and took responsibility. It is the role of federal government to protect our most financially vulnerable. I urge this government to do its job and not pass this harmful legislation.

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