Community organisations that are part of the Stop the Debt Trap Alliance are urging the Senate not to delay the Financial Sector Reform Bill.
The Bill needs to be passed as a matter of urgency in the remaining Parliamentary sitting days of 2022.
Anglicare Australia, Consumer Action Law Centre, CHOICE, Financial Rights Legal Centre, Financial Counselling Australia, the Indigenous Consumer Assistance Network and St Vincent de Paul Society have written a letter to Federal Senators calling on them stand up for people experiencing vulnerability.
“We have written to Senators today asking them to reaffirm their support and to pass the Bill. Without the new protections Australian families will continue to suffer significant harm,” said Gerard Brody, CEO Consumer Action.
“It’s been more than six years since we have been calling for these reforms, and further delay will just cement the untold harm affecting thousands of Australian families who are needlessly pushed into debt by unaffordable payday loans or sold dodgy and expensive consumer leases,” he said.
The reforms provide for vital enhancements to the national credit laws that apply to payday loans and consumer leases, that will reduce the risk of excessively high repayments with these products that lead people into a debt spiral.
Under the Bill, a new “anti-avoidance” provision will come into effect immediately.
“This new anti-avoidance provision is ground-breaking and will allow the Australian Securities and Investments Commission to immediately use it to tackle business models that repeatedly avoid the law through tricky contractual structures, such as predatory Cigno Loans,” Mr Brody said.
“Cigno charges more than 900% in interest, and has defied ASIC enforcement action including a Full Federal Court finding of unlawful lending, by simply changing its contract slightly. An anti-avoidance provision could be used immediately and would stop the harm.”
The groups also called for the industry-funded compensation scheme of last resort, also included in the FSR Bill, to be legislated.
“People have waited long enough. A compensation scheme for victims of financial misconduct was one of the most important recommendations of the banking royal commission but it’s one of the last to be implemented. We can’t go into another Christmas with victims wondering if they’ll ever get their money back.”