Monday, 30 November 2020
National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019; Second Reading
That this bill be now read a second time.
The National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 will amend the National Consumer Credit Protection Act 2009 to provide better protections for consumers from small amount credit contracts, commonly known as payday loans, and consumer leases, commonly known as rent-to-buy schemes. The bill will impose a cap on rent-to-buy schemes, require payday loans to have equal repayment amounts and payment intervals, remove monthly fee charges where the payday loan has been repaid early and in full, prevent marketing of rent-to-buy schemes at people's homes, create stronger laws to ensure compliance and increase penalties for noncompliance.
If that all sounds very familiar to members in this House, it's because in this place we have tried time and time again to bring about these reforms, including the government showing an interest in these reforms at one stage. I remind honourable members that it was way back in 2015 that the federal government announced a review of payday lending laws and regulated consumer leases, and it organised for an inquiry to be conducted. The final report of that inquiry was handed down in March 2016. One thing led to another, and the government released an exposure draft of the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017 late in that year. However, that bill never came to fruition. In addition to the government's early effort, there have been numerous attempts by the opposition and by crossbenchers, both in this place and in the other place, all of which have failed to progress.
It beggars belief that, after so much talk and so much effort by so many people, we still have not provided the protection for consumers that they desperately need and will need even more as we go into the post-pandemic world and as government income support payments are reduced. Experts, including ASIC in front of Senate estimates just recently, have made the point that there will be likely an increased reliance by consumers on payday loans and rent-to-buy schemes. So, frankly, it beggars belief that we are not onto this. Really, there's no good reason that, if we really did want to bring about this reform, we couldn't have this bill through both houses of parliament in this sitting fortnight. That would be the right thing to do by the community. That would mean we would go into next year, when government support payments are reducing, with greater protection for consumers. Let's not forget: this is about members of the community. I could stand up here and give countless examples of the harm that these payday loans and rent-to-buy schemes are causing. I have limited time, but I'll give one or two examples.
There's the case study of a single mother, with three children, whose main income is from Centrelink. She was lonely at night and began gambling online, which she funded via obtaining payday loans from eight different online payday lenders. The bank statements she provided when applying for those loans clearly showed where she was spending her money: on gambling. In fact, most of the money on those statements was clearly going to other payday lenders for gambling and also to a debt collection agency. On the consumer checklist, the lender Ferratum made a number of false claims, and she continued to be issued loans. When Ferratum eventually declined her a loan, they sent her request to another payday lender, Cigno, without her permission. Cigno then advanced her a loan. She approached her bank, Westpac, and asked them to cancel her direct debits to payday lenders, but Westpac refused, saying she would need to contact them directly even though banks can cancel direct debits. When this unfortunate woman finally engaged a counsellor, she was struggling with bills and life in general. She became homeless and remains homeless.
I have another quick example. A 17-year-old, who had been diagnosed with psychosis and has been homeless for over six months, applied and was approved for a payday loan of $250 to cover her daily expenses. However, she was hospitalised due to a deterioration in her mental health and was in recovery for several months. Over that year her debt, which started at $250, escalated to $770 with fees and interest added each week. I'm pleased to report that after engaging a financial counsellor this person was able to get the debt waived on account of the irresponsible lending from the service provider.
I could go on and on and on about this issue, and I'm sure honourable members in this place have heard many examples themselves. It beggars belief why we're not doing this. But not only are we not bringing about these reforms; the government wants to go one worse and actually wind back responsible lending laws. The government's National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 will scrap responsible lending laws for banks which were introduced after the GFC, shifting back to a 'borrower beware' model, even though a coalition of 125 peak financial institutions have come out strongly opposing these changes. I'm painting a pretty grim picture here. I'm painting a picture of a government that five years ago indicated an interest in cracking down on payday loans and has done nothing about it. I'm painting a picture of a government that not only is doing nothing about payday and rent-to-buy schemes but is now ploughing ahead with cutting back on the very sensible consumer credit protections that were introduced after the GFC.
I think we're forgetting what our job is in this place. It's to help, support and protect our constituents. I make the point again: I'm sure I could get the opposition to support this private member's bill. The opposition, to its credit, has tried to progress these matters on a number of occasions in the past. Through you, Speaker, I call on the government to get behind this private member's bill. Let's see it through both houses of parliament over this sitting fortnight so that when the community goes into 2021, as government income support washes off and people are at risk from these predators even more, they have the protections they need. In my remaining time, I invite the member for Mayo, who is generously seconding this bill and has done a lot of work in this space herself over several years, to make a few additional comments.
I'm very grateful to second the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2020. I can't think of a bill that has been presented to the parliament more than this bill. The government talked about it. Labor have presented their private member's bill. It's been presented in the Senate. I have presented it. I think the former member for Indi actually presented a bill, and now it's the member for Clark.
We are letting Australians down when we don't act with respect to predatory payday lending. I actually want to touch on something that is related to payday lending, and that is Afterpay. Afterpay is a tsunami waiting to happen. We had a 90 per cent increase in use in the last year. We had one in five consumers using Afterpay receiving late fees, and, when they need to take out a loan to pay those late fees, where do they go? They go to get a small loan credit contract, and then they pay up to a 200 per cent increase. We're talking about $43 million in late fees with respect to Afterpay. We need to do work in this place with respect to Afterpay and with respect to payday lending. We are doing the greatest of disservice to Australians by not acting. The fact is that this is the government's own legislation and for many years now frustrated members of parliament have taken the government's own work into this place and said, 'C'mon, let's work on this; let's do this together,' yet we don't even have enough members in the chamber here to make quorum. It's a shame. We need to do better in this place on this very important work. I urge the government to actually make it happen.