James Stevens (Sturt, Liberal Party) Share this | Hansard source

I rise to make some brief comments in support of the second reading of the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. Obviously, the flow of credit in our economy is vital for economic growth: getting capital through the arteries and veins of the economy to the businesses and the households that need it. If we're a society that doesn't support people being able to borrow money, then we're limited to our equity capacity. That's obviously a spectacular handbrake on economic growth and creating jobs and a better life for all Australians. It's equally important that there be a balance in place not only so that we have mature, flowing credit and capital markets but also so that people are protected from potential exploitation. I think these amendments are sensible and are going to make sure that the balance between those two objectives is right.

During my adult life, there have been two major economic shocks or challenges that we've faced in this country, but of course both were global. One was the global financial crisis and the other is what we've faced in the last 12 months because of the coronavirus pandemic. Both times we have seen how surprisingly robust the financial sector is in this country. It is actually something to proud of. There is bad conduct and behaviour that occurs, and we should be making sure that we find that when it happens and that appropriate punishments are in place so that there is a disincentive to seek to take advantage of people. But, by and large, I would say that we're very well served by the mature financial sector that we have in this country. We certainly saw during the global financial crisis our four major banks become four of the largest by market capitalisation for a period of time there, because they were able to stand strongly, with some balance-sheet-underwriting support from the Commonwealth, of course. But they didn't need to be bailed out. They were protected and they survived and they were strengthened through that process. Equally, in the last 12 months, we've seen the resilience of our financial sector.

So the reforms in this bill are quite timely because it is important that we encourage our financial sector to support lending and provide lending, and I think there is reasonable evidence that, in certain categories of lending, things have become too restrictive, and that's leading to people who might have been able to access finance and capital not being able to do so and subsequently limiting how they can grow their businesses and grow our economy and create jobs. Clearly, the amendments here are designed to apply these restrictions back to the small amount credit contracts and consumer leases and other credit products. Banks will continue to be regulated by APRA, as we heard from the previous speaker, and new lending standards for non-bank lenders will be introduced that will maintain consumer protections while reducing the compliance burden for both lenders and borrowers. High compliance burdens only lead to higher costs, and we in the Liberal Party know that we need appropriate levels of regulation, not unnecessary levels of regulation, and, if they are preventing banks and institutions from lending money when they otherwise would have, then we should strongly consider why that regulation is in place. Why is it necessary and why are we preventing people from accessing the capital that they need?

There are some key reforms here that extend to small amount credit contracts and consumer leases. We're introducing a cap on costs that will limit what a lessor can charge. We're facilitating the introduction of a cap on the amount consumers can devote to leases. We're requiring the SACCs to have equal repayments and equal-repayment intervals in order to prevent SACC providers from artificially extending a loan. We're prohibiting SACC providers making unsolicited SACC invitations to current and former customers, prohibiting door-to-door selling of consumer leases and introducing broad anti-avoidance provisions to prevent SACC and consumer lease providers from circumventing the law.

I also make the point that the Australian Financial Complaints Authority is one of the key institutions that the government has to provide consumers with protections and avenues to address issues that might arise for them in dealing with financial institutions. To briefly digress, I had an experience with them recently, with a constituent who had had money—a substantial amount of money—transacted out of their account without their authorisation or knowledge. We were able to work with the Australian Financial Complaints Authority to achieve a complete resolution of that matter, and the entirety of the funds that had been removed were restored to the gentleman's account. That, to me, was an excellent example of the institutions that we've got that protect consumers, and particularly the smaller parties in the relationship between a big financial institution and an individual borrower. That was an excellent experience for me, and I'm glad that we've got AFCA in place to help ensure that consumers are protected and that financial institutions are following the laws. That is the case with APRA as well, and ASIC and all of the government integrity institutions that we've got this country.

As I said at the outset, this is about making sure we get the balance right between protecting vulnerable people and ensuring that credit is flowing to the maximum capability, safely and fairly, within a rules based structure, so that we've got mature financial markets that are supporting businesses to grow and create jobs. For those reasons, I commend the bill to the House.

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