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Financial Rights Legal Centre has a strong involvement in policy and law reform in the area of consumer credit, debt and banking. Our advice and casework services inform the Centre’s policy priorities.

We promote reforms in regulation, policy and industry practices that will help create a fairer marketplace for consumers of financial services, particularly disadvantaged consumers. In addition, we make submissions to government and industry, participate in working groups, comment on draft legislation, undertake research, refer unfair practices and systematic issues to regulators and/or industry groups for investigation, and raise awareness through the media.

While successfully advocating for a number of individual clients, we have effectively harnessed the knowledge obtained in this process to lobby for systemic protection from problematic practices. We regularly communicate with regulators such as the OFT, ASIC and the ACCC in a combination of formal meetings (such as the Consumer Credit Code Working Party), written submissions to government initiated reviews, publishing reports on our own initiative and other ad hoc consultation.


Submission to ASIC’s Consultation Paper 282 – Remaking ASIC class orders on financial counselling licensing relief

Financial Rights Legal Centre strongly supports ASIC’s proposals to continue the current licensing relief with the proposed new legislative instruments.

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Joint consumer submission regarding Treasury Laws Amendment (External Dispute Resolution) Bill and Regulations 2017 exposure draft

Following the the Ramsay Review into the External Dispute Resolution and Complaints Framework, the Government has agreed to all 11 recommendations including the establishment of the Australian Financial Complaints Authority. Financial Rights has joined with other consumer organisations to support the draft Bill to implement the Australian Financial Complaints Authority and recommend a series of amendments.

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Submission to the Insurance in Superannuation Working Group re: Member communication and engagement

Financial Rights submission on the Insurance in Superannuation Working Group’s third discussion paper on member communication and engagement argues the need for the Working Group take a step back and focus on general communications and engagement principles.

Financial Rights recommends the Working Group develop overarching communications and engagement principles that should both improve the Code and the consumer/superannuation fund relationship and be key promises or objectives under the Code. The Working Group should then systematically identify every step of the consumer/superannuation fund relationship to identify what commitments can and should be made to improve the relationship with consumers, build trust and confidence and ensure that fewer disputes and issues arise in the future.

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Submission to the Victorian Department of Health and Human Services re: Addressing non-insurance and underinsurance for emergencies in Victoria

Financial Rights has made a submission to the he Victorian Department of Health and Human Services regarding Addressing non-insurance and underinsurance for emergencies in Victoria. The submission argues the need for increased suitability requirements, standard cover, encouraging mitigation and producing better information for consumers.

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Submission to the Emergency Services Levy Monitor’s Public Inquiry Issues Paper

While the Emergency Services Levy Monitor’s Issues Paper is largely directed at eliciting information from relevant insurance companies regarding the processes and actions they are taking with respect to the implementation of the Emergency Service Levy, nevertheless Financial Rights has made the following contribution to the inquiry with respect to issues around communications, transparency and disclosure.

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Submission to the Insurance in Superannuation Working Group re: Claims Handling

Financial Rights submission on the Insurance in Superannuation Working Group’s second discussion paper on claims handling focuses on the need for the industry to introduce basic claims handling practices. This includes providing PDSs to members, committing to actual time frames for the claims handling processes and not gather evidence from members in a piecemeal fashion.

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Submission to the Insurance Council of Australia General Insurance Code of Practice Review

Financial Rights believes that the general insurance industry is at least 20 years behind the banking sector in terms of addressing basic consumer issues be it in claims handling, mis-selling, unfair contract terms, disclosure problems and the creation of problem products and business models. Financial Rights strongly believes that that there needs to be a fundamental shift in the general insurance sector to one based upon the concepts of suitability (the insurance equivalent of responsible lending in the banking and credit sector) and the standard cover model.

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Submission to the Insurance in Superannuation Working Group re: Account balance erosion due to insurance premiums

The Insurance in Superannuation Working Group was formed in 2016 to assist the development of a Code of Practice applying to superannuation funds – extending the current Life Insurance Code of Practice. Financial Rights has provided input into this first of a series of discussion papers on account balance erosion.

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Joint supplementary submission re: Design & Distribution Obligations and Product Intervention Power Proposals Paper

This supplementary submission follows the release of Report 516: Review of mortgage broker remuneration and addresses the fact that governance and oversight arrangements by lenders, aggregators and brokers should be improved.

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Joint consumer submission to Treasury regarding the Design and Distribution Obligations and Product Intervention Power – Proposals Paper

Financial Rights joined with other consumer advocates to commend the Treasury Paper’s focus on improving the existing regulatory framework to ensure consumers receive fair treatment from product issuers and distributors. We believe the integrated package of reforms proposed in the Proposals Paper will significantly improve consumer outcomes in the financial system.

We believe the Proposals Paper needs strengthening in two important areas. Firstly, the range of products and services covered by the proposed design and distribution obligation and product intervention power should be extended, particularly in regards to credit. Secondly, the Australian Securities and Investments Commission (ASIC) should be empowered to make a broader range of product interventions, particularly in relation to remuneration.

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Submission to the Senate Inquiry into Consumer Protections in the Banking, Insurance and Financial Sector

Financial Rights believes that a number of regulatory reforms in the financial services sector in the past decade – including the introduction of compulsory external dispute resolution and the responsible lending – have greatly improved and strengthened the consumer protection framework and are generally serving Australian consumers well. There are however a great number of problems, gaps and failures with the current consumer protection regime that have tremendous consequences upon those experiencing financial stress and hardship. The raft of scandals that have beset the financial services sector recently are indicative of these problems but Financial Rights works daily with financially vulnerable Australians caught out and frustrated by the plethora of minor and major loopholes and regulatory gaps, as well as poor service resulting from a profit driven culture.

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Submission to the ACCC draft decision regarding Aioi Nissay Dowa Insurance Company Australia Pty Ltd & Ors – Authorisation – A91556 & A91557

Financial Rights welcomes the draft decision to deny the Aioi Nissay Dowa Insurance Company Australia Pty Ltd & Ors – Authorisation request. Financial Rights agrees that a commission cap of 20 per cent will not redress the well-documented, long standing problems with these products and sales and distribution methods, and will not provide any significant public benefit.

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Joint consumer submission to the Review into Dispute Resolution and Complaints Framework Interim Report

Following the release of the Ramsay Review into the External Dispute Resolution and Complaints Framework, Financial Rights joined with other consumer organisations to commend the Panel’s focus on enhancing the existing external dispute resolution (EDR) framework and for extending the benefits of EDR to superannuation customers. It is our view that integrated package of reforms proposed in the Interim Report will significantly improve dispute resolution in the financial system.

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Civil Justice in NSW

Financial Rights made 15 recommendations to the NSW consultation on civil justice. We supported the use of new smart technologies and online programs to help people in NSW resolve disputes early and get access to justice. However we warned that any new self-help programs should be developed by actual legal caseworkers who have practical experience resolving disputes. We also made recommendations around the timing of providing legal resources to people, the creation of a new Retail Ombudsman, the need for pawnbrokers to be in EDR and the creation of a national justice fund.

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Senate Inquiry into the General Insurance Industry

The Financial Rights has extensive advice and casework experience dealing with consumers of general insurance in Australia. Based on that experience we have made many recommendations to the Senate Economics References Committee regarding the following broad problems facing consumers of insurance:

  • Reasons behind and solutions to increasing insurance costs;
  • The lack of transparency and contestability in insurance pricing;
  • Problems surrounding price comparison websites;
  • The need for Unfair Terms protections in insurance contracts;
  • Standard cover and product suitability; and
  • Big data and the future of insurance.

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Submission to the Communications Security Branch Attorney-General’s Department regarding the Access to Telecommunications Data in Civil Proceedings Review

Financial Rights strongly opposes any exceptions to the prohibition in section 280(1B) for civil proceedings. The data retention regime was introduced for the purposes of national security and criminal law enforcement. The use of metadata for civil proceedings does not meet the original objective in any respect. There is no evidence that the current civil justice system needs access to this data.

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Joint Submission in response to Consultation Paper 272 – Remaking ASIC class orders on time-sharing schemes

In response to ASIC’s Consultation paper on remaking its class orders on time-sharing schemes, Financial Rights has joined with Consumer Action in putting forward the following views on time-sharing:

  • an opt-in regime should apply to timeshares rather than a cooling-off period;
  • consumers should be able to more easily terminate their timeshare arrangement and any associated finance arrangement if they determine that it is unsuitable;
  • the term of timeshare agreements should be more limited; and
  • an increase in the volume of information provided to consumers is unlikely to be of any significant benefit, but there are some areas where more accurate disclosure may assist more sophisticated consumers in making their decisions.

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Joint submission to the Australian Consumer Law Reviewre: Door-to-door sales in Indigenous Communities

A coalition of consumer rights organisations have made a stand alone submission on the issue of door-to-door sales practices in Indigenous communities. We believe the existing ACL provisions governing unsolicited sales fail to address systematic exploitative conduct targeting Indigenous consumers. The most straight-forward way to prevent ongoing misconduct and evident consumer detriment through this review process would be to introduce a ban on unsolicited sales. However, if unsolicited sales are not banned, the review should pursue measures that will benefit those currently most harmed by unscrupulous sales practices.

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Submission to the ACCC re: ANZ Banking Group Ltd application for authorisation N99426

Financial Rights contends that the proposed authorisation request from ANZ would not deliver a net public benefit and would deliver a detriment because it would be continuing to finance single premium insurance policies when ASIC has identified this conduct to be detrimental for consumers; and the authorisation fails to acknowledge the availability to pay insurance premiums by installments.

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Submission to the Australian Consumer Law Review Interim Report, October 2016

Financial Rights has focused it’s response to the ACL Interim Report on unfair terms in insurance contacts, the need for a retail ombudsman and unsolicited consumer agreements.

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Submission to the Productivity Commission’s Draft Data Availability and Use Report

Financial Rights believes that the key recommendations of the Productivity Commission’s Draft Report on Data Availability are fundamentally flawed and should be abandoned. We believe several basic privacy protections continuing to be missing including:

  • Compensation for data breaches and re-identification and a tort for serious invasions of privacy;
  • Easy and free access to justice for breaches including an external dispute resolution scheme that can making binding determinations and investigate systemic issues;
  • An appropriately resourced and empowered regulator.

Without these basic protections, individuals will continue to not have trust and confidence with the access to justice regime when it comes to a privacy breach.

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Submission to the Inquiry into the Life Insurance Industry

The Parliamentary Joint Committee on Corporations and Financial Services established an Inquiry into the Life Insurance Industry to examine the need for further reform and oversight. Financial Rights details the key concerns of life insurance consumers arising from the new Life Insurance Code of Practice, ASIC’s recent report into the sector and the need for legislative reform and regulatory intervention.

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Joint submission to the Financial Services Council regarding Minimum Standard Medical Definitions

The FSC has released draft minimum standard medical definitions for trauma/critical illness insurance products for public consultation. Financial Rights and the Consumer Action Law Centre have submitted that the life insurance sector needs to ensure the definitions are reviewed by independent medical specialists rather than their own conflicted specialist.

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Submission to the Treasury regarding the Insolvency Practice Rules 2016

To give full effect to the new Insolvency Law Reform Act 2016 the government have developed a number of legislative instruments to sit alongside it including the Insolvency Practice Rules. Our submission focuses on ensuring those in financial difficulty are not further burdened by inflexible insolvency rules.

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Submission to the ACCC re: Aioi Nissay Dowa Insurance Company Australia Ltd & Ors applications for authorisation A91556-A91557

The ACCC sought input on an application by insurers for authorisation to cap commissions on add-on insurance sold through motor vehicle dealerships at 20% of premiums. Financial Rights’ recommends that the authorisation be denied unless it is enhanced by:

  1. it includes a ban on single premium policies;
  2. it unbundles the sale of add-on insurances from the sale of loans;
  3. includes a ban on the sale of life (trauma) insurance in dealerships;
  4. limits commissions to a lower level (say 10 per cent).

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Joint submission on the Expansion of the Financial Ombudsman Service’s Small Business Jurisdiction

Financial Rights and Consumer Action are supportive of FOS’s proposed expansion of its small business jurisdiction.

The jurisdictional limits and compensation caps for consumer disputes must be reviewed and raised significantly at the same time. It would be sensible and fair for the same limits to apply to consumer and small business disputes. This would also simplify FOS’s jurisdiction and avoid further confusion for consumers.

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Letter to the Prime Minister: Dispute resolution and complaint handling in the financial services sector

Consumer groups have written to the Prime Minister to expression our concerned about the creation of a new banking tribunal, as we fear it may in fact deliver worse outcomes for consumers. We encourage the Government to ensure that the type of dispute resolution forum that is ultimately decided upon builds upon the existing success of EDR schemes and is one that delivers for Australian consumers.

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Joint consumer submission to the Review into Dispute Resolution and Complaints Framework

In May 2016 the Federal Government announced the establishment of an independent expert panel to lead the review into the financial system’s external dispute resolution and complaints framework. Our joint consumer submission strongly supports mandatory external dispute resolution. We believe the final dispute resolution framework in the financial system should empower a single industry-funded external dispute resolution scheme.

We are opposed to the establishment of a new banking tribunal. The consumer experience of tribunals has not been positive and are very concerned that a new tribunal may in fact deliver worse outcomes for consumers.

While there is certainly room for improvement, the existing EDR schemes are world class and an extremely important alternative to the court system. A robust, well-resourced single ombudsman scheme with appropriate scope and design, together with a well-funded regulator and a statutory scheme of last resort, will provide a free, fair, accessible and effective dispute resolution framework in the banking and financial sector.

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Joint Consumer Submission to the ABA Independent Review of the Code of Banking Practice

The Australian Banker’s Association agreed to resource a joint consumer submission to the current review with the Financial Rights Legal Centre engaged by the Consumer Federation of Australia to consult with consumer representatives to prepare this submission. Eighteen consumer organisations have endorsed the submission.

Trust and confidence in the financial services sector, particularly the banking sector remains low. While Consumer Representatives do acknowledge that the banking sector has been working in many areas to improve the way they engage with consumers, there remains a number of areas where banks can work harder to improve their relationship with consumers, particularly with those in financial hardship and other vulnerable Australians.

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Joint submission to the ABA’s Independent Review of Product Sales Commissions and Production Based Payments

From the consumer impacts we observe that poorly constructed incentives have played a part, (and we suspect, have driven), inappropriate sales practices. Financial Rights, Consumer Action and Good Shepherd Microfinance take the view that product sales commissions and product based payments inevitably distort sales-staff behaviour, placing the imperative to make a sale above considerations of appropriateness for the consumer. We are sufficiently convinced of the negative outcomes of commission driven sales to contest the value of retaining such incentives, and believe that a major cultural shift in banking practice is necessary for the public good.

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Joint submission to the Financial Services Council on the Draft Life Insurance Code of Practice – Second Public Consultation

The drafting of a Life Insurance Code of Practice follows the industry-commissioned Trowbridge report on retail life insurance advice, which recommended a life insurance code of practice be developed. We are pleased that the FSC has committed to instituting a Code of Practice and believe that this will be of great benefit to both consumers and the industry. Benefits to consumers arising out of the current draft of the Code include commitments moving beyond the law, relating to investigations, surveillance, product suitability, the review of medical definitions and financial hardship. However, we hold significant ongoing concerns with numerous elements of the Code as it stands including time frames, enforceability, group insurance, sales practices and problem products and medical definitions.

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Submission on the Emergency Services Levy Insurance Monitor Act 2016 (NSW) Draft Guidelines

The NSW Government has established the Emergency Services Levy Insurance Monitor to oversee the transition from an insurance-based levy to a property-based levy. Financial Rights has made a submission supporting the process being developed by the Emergency Services Levy Insurance Monitor and the guidelines proposed to address issues relating to price exploitation and false or misleading conduct. The Monitor’s role in ensuring consumer interests are protected is a vital one throughout the transition process.

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Submission to the Productivity Commission regarding the Data Availability and Use Issues Paper

The Productivity Commission is currently looking into the benefits and costs of options for improving availability and use of public and private sector data. Financial Rights has made a submission on matters relating to Australia’s consumer credit reporting regime, insurance reporting and privacy protections. The submission argues that we have grave concerns about unintended consequences in making credit reporting mandatory and we believe an overhaul of the insurance reporting regime is necessary.

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Joint submission on the Credit Cards: Improving Consumer Outcomes and Enhancing Competition Reform Paper

The Federal Government is proposing a set of reforms that are aimed at improving competition and consumer outcomes in the credit card market including tightening responsible lending obligations, prohibiting issuers from making unsolicited credit limit increase offers and requiring issuers to provide consumers with online options to initiate card cancellation. In a joint submission with the Consumer Action Law Centre we are broadly supportive of the proposed reforms and pleased that the Government is tackling issues that have long been of concern to consumers.

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Submission on the Improving Bankruptcy and Insolvency Law Proposal Paper April 2016

Financial Rights supports the central proposal to reduce the default period for bankruptcy to 1 year from 3 years. This strikes an appropriate balance between the interests of creditors, and ensuring that bankruptcy enables a fresh start for debtors, and is not needlessly punitive. Reducing the bankruptcy period will significantly improve the bankrupt’s opportunities for early financial rehabilitation and participation in economic activity.

Intuitively it would seem that debt agreements would drop in popularity because debtors would clearly opt for one year of bankruptcy over 3-5 years or more of a debt agreement. However, Financial Rights has no confidence this will occur because people entering debt agreements are not getting proper independent, conflict free advice. Financial Rights is therefore strongly of the view that Part IX of the Bankruptcy Act should be repealed because it serves the interest of debt agreement administrators and associated entities far more than the debtors and creditors it was created to assist.

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Submission to the Australian Consumer Law Review: Issues Paper 2016

Financial Rights has argued that, as it currently stands, the Australian Consumer Law does not make it easy for consumers both individually and collectively to assert or defend their rights and that regulators need to be empowered and resourced to deal with systemic issues more proactively. We recommend consideration of a general unfair trading provision that would enable regulators to before harm occurs; the application of unfair terms laws to insurance contracts, and support for an independent Consumer Advocacy Trust.

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Submission to NSW Fair Trading on the Draft Strata Schemes Management Regulation 2016

Financial Rights has made a number of submissions on the new NSW Strata Schemes Management legislation and with this submission on the draft regulations we reiterate our concerns with respect to the new payment plans. While introducing payment plans is an important and positive step, they remain voluntary and heavily weighted towards the interests of owners corporations.

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Submission to the Review of the small amount credit contract laws: Final Report

The Financial Rights Legal Centre continues to believe that that the simplest approach to dealing with the dangers of small amount credit contracts and consumers leases is to ensure that they are all subject to a 48 per cent Annualised Percentage Rate (APR) cap. However, Financial Rights welcomes this Final Report, supports most of its recommendation and seeks implementation of these recommendations as soon as possible to limit the ongoing damage to financially vulnerable consumers wrought by the pay day loan and consumer lease sector.

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Submission to the Review of the NSW Local Government Rating System

Councils are litigious – so much so they are in the top ten issuers of statements of claim in the NSW Local Court system. This not only clogs the system and increases costs to government but exacerbates problems for ratepayers who are already experiencing financial hardship. Financial Rights recommends that a detailed procedure is required before litigation can be commenced by a local council that is consistent with model litigation best practice and best practice hardship policies. Financial Rights also recommends legislating a right to apply for financial hardship in the Local Government Act 1993 among other recommendations to ensure those suffering from financial hardship do not experience a worsening of their situation through their interactions with local councils.

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Additional submission to the Australian Energy Regulator regarding the draft Sustainable Payment Plans Framework

The Australian Energy Regulator sought additional input from stakeholders on the issue of publicly publishing a list of retailers who have signed up to the Framework and how retailers should begin conversations with those in financial hardship. Financial Rights strongly supports the publishing of retailer names who sign up the Framework and made a number of suggestions regarding questions to ask of consumers.

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Joint consumer submission to the Senate Scrutiny of Financial Advice Inquiry

Our joint submission with CHOICE and the Consumer Action Law Centre addresses problems with the sale of life insurance, with the claims and investigations process and with the level of funding and powers the financial regulator needs to properly regulate the life insurance sector. Our organisations have raised concerns about life insurance for decades. There are ongoing issues with the industry that mean consumers are sold complex, expensive and, far too often, dud products. Consumers face delays and difficulties when claiming on policies and the regulator responsible for keeping the industry accountable, the Australian Securities and Investment Commission (ASIC), is underfunded and needs additional powers.

Our joint submission makes a series of recommendations to address these problems including, amongst others:

  • the removal of all commissions in life insurance advice;
  • applying unfair contract terms to life insurance products
  • developing a fair standard definition for common terms for use in all life insurance policies; and
  • establishing an effective and registered Life Insurance Code is established as soon as possible.

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Submission to the Australian Energy Regulator regarding the draft Sustainable Payment Plans Framework

Financial Rights strongly supports the development of this draft Framework. It is important that retailers are guided to develop a practical model to analyse their customer’s capacity to pay. Financial Rights’ submission addresses some of the outstanding concerns with the drafting to ensure that the Framework that it applies to inactive account customers, is appropriately publicised and evaluated and that the Framework is effective in improving outcomes for consumers.

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Submission to the Review of the Residential Tenancies Act

We put in a very short email submission to Fair Trading NSW supporting the Tenants’ Union of NSW and Tenancy Advice and Advocacy Services as the only place for tenants to get free and independent advice.  Those services should be well funded as they are a critical and irreplaceable part of early dispute resolution services for tenants in NSW.

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Submission to Credit Repair Australia Code of Conduct

Credit Repair Australia is developing its own Code of Conduct. We wrote a submission to O’Shea Lawyers who are developing the code with the following comments and recommendations:

  • We strongly believe that debt management firms should instead belong to an industry-wide and enforceable Code of Practice. Individual Codes of Conduct like the one drafted by CRA will only create inconsistent consumer protections for customers and will not be universally enforceable.
  • Codes of conduct in the financial services sector should be modelled on ASIC’s Regulatory Guide 183. Unfortunately in its currently drafted form the CRA Code of Conduct does not come close to addressing the criteria listed in RG183. We are particularly concerned about the Draft Code’s failure to  address consumer concerns; demonstrate enforceability; outline any remedies for breaches and commit to a 3-year independent review.
  • We also made many specific recommendations regarding the provisions in the draft code.

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Submission to Life Insurance Code of Practice

The Financial Services Commission has written a Draft Code of Practice for the Life Insurance industry. Consumer advocates have written a joint submission in response which argues that the Life Insurance Code of Practice (LICOP) as currently drafted is not a best practice standard and has not fulfilled the expectations and obligations set by Government. The current draft does not require life insurers to meet any standard that is not already required of them by the law. It does not meet the minimum standards of enforceability set by ASIC. The draft Code includes a number of sections dictating how consumers should be behave rather than self-regulating the industry’s own conduct addressing consumer issues, concerns and problems with industry practice. The current draft also makes no attempt to address the problems with churn and poor sales practices, issues that initiated the process that ultimately led to the development of this draft LICOP. Unless substantial changes and additions are made, consumers will have minimal confidence in the Code and our organisations will not be able to support it. The final Code should also set enforceable, best practice standards for advisers and licensees.

We believe that life insurers should make the following specific commitments to improve consumer confidence in the industry (additional recommendations are in our submission):

  1. Life insurers should address consumer concerns about someone selling or distributing life insurance products.
  2. Life insurers should commit to provide to policyholders:
    • projections of likely costs of the premium
    • information and contact details of the subscriber’s internal dispute resolution and complaints process;
    • in the case of replacement policies, information on what a consumer may potentially be losing and specific information on pre-existing conditions
  3. Contact via a letter, email or text message should be sent on the same day that a cancellation occurs. The Code should also require life insurers to offer financial hardship assistance if a customer misses a payment, and be prepared to offer reasonable assistance if it is requested.
  4. The life insurance industry should:
    • commit to improving the prominence of warnings and the risks and consequences of replacing a policy
    • commit signatories to investigate reported or suspected mis-selling of replacement policies
    • report where they uncover wrongdoing; and
    • ensure any customers who have suffered a loss are compensated.
  5. The Code should include directions to the IDR and Complaints process on making a decision. For those policyholders experiencing financial difficulty whilst an investigation is taking place life insurers should commit to paying a portion of the income protection payments.
  6. Life insurers need to commit to training staff on how to engage appropriately with vulnerable consumers.
  7. The Code needs to include a commitment to fully inform consumers of the tax and legal implications of a lump sum payment.
  8. The Code should commit life insurers to using only licensed investigators and more specific standards be set for investigators to address our concerns with respect to investigations including poor communication practices, aggressive or unethical investigator behaviour and unreasonable requests for documentation.
  9. The Code should commit insurers to addressing the high lapse rate of funeral insurance products; immediately stop sales of funeral cover for people under 18 years old; stop allowing CCI to be sold through the ‘add-on’ sales technique; and not allow products to be sold through pressure sales techniques.

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Submission to the SACC Interim Report

We wrote a  submission responding to the interim observations and options put forward by the Small Amount Credit Contracts Review Panel (Payday Lending Laws Review). We supported almost all of the options put forward by the Interim Report as they all increase the effective regulation of payday loans and consumer leases.  Specifically we recommended:

  • Additional responsible lending obligations be required in relation to SACCS. The presumptions have not succeeded in addressing the harm as intended and are poorly complied with. ASIC enforcement should be a priority.
  • Consumer leases should be subject to the same level of protection as all other regulated products.
  • A cap of 48% per annum on the maximum amount a lessor can charge should be introduced for all leases, consistent with other regulated loans.
  • A 48% cap should apply to all types of consumer leases, not only low-value household and electronic goods.
  • There should be a limit imposed on the maximum length of leases to balance the benefits of lower repayments against the additional cost of credit incurred by longer term contracts. This could be set by reference to a number of years, or by limiting the total amount payable to a multiple of the cash price.
  • The cash price and accurate description of the goods must be disclosed on the consumer lease contract. A comparable interest rate should also be disclosed.
  • Include the cost of add on features under the cap whether paid for by cash or financed under the lease. If delivery charges are not included under the cap, they should be separately disclosed and capped and should not be permitted to be financed (incur interest payments).
  • There should be a 5% cap on the percentage of net income that can be committed to repayments, which includes the total amount of repayments made towards any SACC, Consumer lease or Centrelink advance.
  • Termination fee should be the lesser of: 1) The lessor’s reasonable costs incurred by reason of the termination or 2) Two months rental under the contract.

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Submission to ePayments Code

Financial Rights put in a short submission to ASIC regarding a modification they are making to Clause 21 of the ePayments Code. This modification makes it easier for financial service providers to disclose information electronically as a default without consumer consent. Our submission warned that not all consumers have reliable access to email, and they should be given a genuine choice as to how they prefer to receive disclosure documents. We also specifically recommended that any electronic disclosure should be accessible on all types of devices, and if a consumer wants a paper copy of their disclosure documents these must be provided free of cost.

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Submission to the AER’s Sustainable Payment Plans Framework

Financial Rights put in a submission and attended a stakeholder workshop regarding the Australian Energy Regulator’s (AER) new Sustainable Payment Plans Framework for energy retailers doing capacity to pay assessments with customers.  Our submission focused on ensuring that the framework applies to inactive accounts; retailers should not increase payments without a new assessment; and retailers should ask additional probing questions of customers to more accurately assess which payments are actually affordable.

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Submission to Elder Abuse Inquiry in NSW

As a specialist community legal centre the majority of calls we receive regarding elder abuse relate to financial exploitation or manipulation. In the 2014-2015 financial year Financial Rights gave legal advice or financial counselling to 3,383 callers who were over 50 years old. This makes up over 25% of the total advice calls we receive from consumers of financial services.

Financial Rights can provide advice in relation to elder abuse where there is a Financial Service Provider or product involved, such as a bank, bank account or credit card. Unfortunately there are a number of situations that would constitute elder abuse when we cannot give legal advice or financial counselling primarily because our funding is not sufficient. Our submission makes several recommendations regarding the lack of funded services for older Australians with questions about their finances, investments or super.

Our submission also draws attention to several financial products that we believe are inherently risky or even abusively unsuitable for older Australians including reverse mortgages, funeral insurance, payday loans and pawnbroking.  We also recommend that financial institutions should take on more responsibility to try to prevent elder financial abuse whenever possible.

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Submission to SACC Review

Financial Rights Legal Centre submits that the SACC regime under the National Consumer Credit Protection Act 2009 (“The Credit Act”) has failed to protect consumers from the harm inherent in pay day lending and other high cost short term contracts. While there has been some containment of costs, it has been insufficient to stop extensive financial damage to vulnerable consumers. Worse, harmful repeat borrowing has increased significantly against the stated intention of the amendments which came into force in 2013. This form of financially detrimental lending is also spreading into wider demographics, effectively undermining extensive efforts at increasing financial literacy by normalising borrowing for consumption purposes. We recommend to the Review that strong action must be taken to address these issues.
Based on our extensive casework experience with the payday lending industry we believe these loans should be banned. The payday lending industry has repeated and systemically demonstrated that:

  • it has a culture of avoidance of the law
  • it relies on repeat borrowing
  • there is systemic non-compliance with the responsible lending laws

We have no confidence that the industry will ever comply with the law in any meaningful way so consumers are adequately protected.
In these circumstances, the only effective way to protect consumers is to ban the industry through an interest rate cap (as has been enacted in a number of countries and states in the USA). This would be achieved by applying an all-inclusive cost cap of 48% or less and enacting adequate avoidance provisions.

Major Recommendations

  • All credit facilities in Australia should be capped at an interest rate of 48% (or less) with no establishment fee allowed (and default fees limited to the reasonable cost of recovery). This would negate the need for the complicated SACC regime.
  • ASIC must be provided with more adequate and more stable funding than it receives now.
  • There should be an automatic remedy of a refund of all fees and charges for any substantive breach of the Act.

As an alternative to the first recommendation above:

  • There should be a hard limit of only two permissible SACCs per 12 month period.
  • The Henderson Poverty Index (HPI) plus a minimum margin should be required as the universal benchmark for all SACC providers.
  • There should also be a ban on concurrent SACCs, refinancing a SACC, and increasing the limit on a SACC.
  • The costs cap should be further reduced to 10% establishment fee and 2% monthly fee.
  • The protection for consumers who receive 50 per cent or more of their income under the Social Security Act 1991 should be changed to a cap at 5% of a Centrelink recipient’s gross income.
  • The Credit Act should include a broad anti-avoidance provision, including the ability to take preventative steps rather than only react after harm has occurred.
  • SACCs providers must be required to disclose an APR comparison rate in advertising and contractual disclosure.
  • That ASIC either ban the advertising of payday loans or, at the very least, introduce strict and specific regulations established for payday loan advertising on television, radio, social media and online.
  • SACCs providers should be prohibited from directly marketing to their customer base because of the high risk of dependency on these types of loans.

In relation to consumer leases:

  • All consumer leases the meet the definition of ‘finance lease’ should be considered comparable with credit contracts and there should be greater consistency in the regulatory requirements. All finance leases and be subject to a 48% interest cap. Otherwise, as a second best option, a specific SACC regime for comparable leases should be enacted with effectively similar protections, with the 48% cap applying to all other contracts, similar to the credit regime.
  • There should be additional disclosure requirements for all consumer leases including the purchase price of the leased good, the amount the consumer will pay in excess of the purchase price, the APR, and the cost of other services financed through the rental payments.

There are other recommendations contained throughout the submission.

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Financial Rights submission to the Northern Australia Insurance Premiums Taskforce, Interim Report 2015

The Australian Government established the northern Australia Insurance Premiums Taskforce following concerns over rising insurance premiums in parts of northern Australia due to tropical cyclones. The Taskforce is charged with examining the feasibility of options to reduce home, contents and strata insurance premiums. These options include the creation of a mutual insurer that offers consumers insurance to cover losses caused by cyclones and a reinsurance pool that would offer reinsurance to all insurers covering their losses caused by cyclones. Financial Rights has made a submission to the Taskforce arguing that whichever model is recommended by the Taskforce, mitigation strategies, greater transparency and increased contestability of pricing must be at its heart and centre of any plan in order to ensure long term positive outcomes for homeowners and communities, value for money for Australian taxpayers and a healthier insurance market.

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Joint Consumer Submission to AFSA on debt agreement marketing (IGPG 1)

This was a joint submission with Consumer Action Law Centre and Financial Counselling Australia.

There have been a number of positive amendments to the Guideline, particularly in relation to
third parties. However, we have suggested a number of amendments to further strengthen the
Guideline below, including recommendations to:

  • ensure the proposed amendments are expressed in plain English;
  • provide further guidance on what specifically amounts to an ‘unsuitable debtor’;
  • provide additional practical examples;
  • clarify that telephone conversations are a form of ‘advertising and marketing’;
  • specify that the term ‘alternative to bankruptcy’ is likely to be misleading;
  • address the appropriateness of targeting consumers who have recently have default
    judgments entered against them.

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Financial Rights Submission on Matters relating to credit card interest rates

The Consumer Action Law Centre (Consumer Action) and the Financial Rights Legal Centre (Financial Rights) welcome the opportunity to provide a submission to the inquiry into credit card interest rates.

Overall, we are concerned by the increasing levels of credit card debt in Australia, and the impact this indebtedness is having on consumers. Briefly, our submission address the following:

  • levels of credit card debt;
  • the impact of credit card indebtedness;
  • the impact of previous credit card reform;
  • barriers to switching credit cards;
  • credit card marketing;
  • credit card disclosure;
  • responsible lending;
  • minimum monthly repayments;
  • value of loyalty programs; and
  • credit card transaction costs.

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Financial Rights submission to the Draft Strata Schemes Management Bill 2015

The NSW Government is introducing a bill to reform NSW strata laws – first major reform since 1973. Financial Rights has long argued the need for amendments to the strata laws to ensure that those owners who find themselves in financial hardship and are overdue in their strata contributions have access to a payment plan process and an internal dispute resolution mechanism. The current draft of the Bill takes some steps towards this goal but in Financial Rights’ view does not go far enough. The Bill provides owners corporations with the choice to voluntarily enter into payment plans but does not make this a right for struggling owners. Similarly, owners corporations are given the choice to voluntarily establish an internal dispute resolution mechanism. Financial Rights believes that both the option for a payment plan and internal dispute resolution process should be made mandatory. Financial Rights also argues that the power for a court to order an owner to pay the expenses of the owners corporation incurred in recovering any contributions not paid should be limited to those expenses that are reasonable in the circumstances.

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Pawn Wars: Financial Rights submission to the NSW Government’s Draft Pawnbrokers and Second-hand Dealers Regulation 2015

Financial Rights’ is disappointed with the NSW Government’s proposed draft Pawnbroking Regulation as it is a missed opportunity to adequately protect consumers. The primary objectives of the proposed regulation relate to preventing the sale of stolen goods. While  this is important there is almost no attention given to preventing other unscrupulous business practices towards consumers that have pawned, and hope to reclaim their own goods.

Only two consumer protection issues that would relate to our consumer clientele were raised and neither one has been accompanied by adequate changes to the Regulation.The most significant element missing from the current regulations is access to an external dispute resolution (EDR) mechanism. Pawnbrokers’ customers are most often the most vulnerable consumers, without resources, capacity or will to commence action in a court or tribunal. Without access to an EDR scheme, low income and/or disadvantaged consumers are for all practical purposes deprived of the opportunity to pursue a valid complaint. The lack of compulsory membership of an EDR scheme is a significant omission in the pawnbroking licensing requirements and should be rectified as a matter of urgency.

Further Financial Rights is concerned that consumers do not understand the true cost of the credit they are obtaining. Pawn agreements brought to Financial Rights by clients most often do not clearly explain the fees and charges payable. Most contain brief, fine print, poorly set out, jumbled together and difficult to understand. There is no clear tabular form to explain the true cost of the credit. Adding some disclosures in tabular form within each actual pawn agreement and extending agreement would make things a whole lot clearer for consumers.

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Submission to the OAIC on its Guide to Complaint Handling Procedures

Financial Rights made a submission to the Office of the Australian Information Commissioner on Consultation draft: Chapter 2 — Privacy complaint handling process.  The OAIC was seeking public comment on its draft Guide to privacy regulatory action (Guide).

This was a joint submission with the Consumer Action Law Centre and it addressed three overarching issues raised by the exposure draft:

  • Complaints handling and enforcement are related but separate regulatory activities and should have separate regulatory actions.
  • The Guide should have more explicit procedural timeframes.
  • Issues of confidentiality of complaints in practice do not match the relevant statements in the Guide.

 We used our experience making a representative complaint under the Privacy Act to inform our comments.

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Submission to the Treasury’s Re:Think Tax Discussion Paper

The Financial Rights Legal Centre’s submission to the Treasury’s Re:Think Tax Discussion Paper argues that Government phase out taxes and levies on domestic consumer insurance products.  We are of the view that these taxes and levies increase the cost of insurance to consumers and contribute to underinsurance.

Financial Rights also recommends that the Government empower a regulator to ensure insurers genuinely pass on tax savings on domestic consumer insurance products to policy-holders.

Finally the submission argues that in the circumstance that a change to the current tax concession regime for not-for-profits is contemplated, guaranteed equivalent funding would need to be provided to compensate for the loss and support the current services of the Financial Rights Legal Centre, other community legal centres and the not-for-profit sector more generally

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Submission to Senate Economics Committee on a Last Resort Compensation Scheme

Australia’s leading consumer groups have made a joint submission to the Senate Economics Committee’s Scrutiny of Financial Advice Inquiry calling for a last resort compensation scheme for consumers with otherwise uncompensated losses as a result of poor financial advice and other financial misconduct. These losses can severely impact affected consumers and their families, the community generally and the reputation of the financial services and credit industries.

The submission argues that a last resort compensation scheme is the missing piece of the financial services regulatory architecture.

Reports of significant uncompensated loss incurred by investors show that existing compensation mechanisms have failed. The Financial Ombudsman Service (FOS) recently reported that there is $21.3 million compensation arising from its determinations in favour of consumers that has not been paid. Consumer groups are deeply concerned that 24.47% of all compensation awarded by FOS to consumers in relation to investments, life insurance and superannuation is unpaid.

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Submission to RBA regarding Review of Card Payments Regulation

The Consumer Action Law Centre (Consumer Action) and Financial Rights Legal Centre (Financial Rights) welcomed the opportunity to comment on the Review of Card Payments Regulation Issues Paper (the Issues Paper) published by the Reserve Bank of Australia (RBA).

In reviewing its card payments regulation, we urged the RBA to explicitly consider the impact of its regulatory actions on disadvantaged and vulnerable consumers. With these considerations in mind, our submission argued (among other things) that card payments regulation should:

  • increase transparency of interchange fees and surcharging;
  • promote competitive neutrality;
  • lower interchange caps;
  • replace weighted interchange caps with hard caps;
  • appoint a regulator responsible for enforcement of payment surcharging rules;
  • ban surcharging for low-cost payment methods; and
  • ensure automatic routing of contactless transactions does not impair consumer choice.

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Submission to ACCC about registration of ARCA’s Principles of Reciprocity and Data Exchange

Financial Rights put in a joint submission with Consumer Action Law Centre and Financial Counselling Australia to the ACCC regarding the registration of ARCA’s Principles of Reciprocity and Data Exchange (PRDE).

Our organisations have for many years expressed concerns about the impact of comprehensive credit reporting (CCR) on consumers. However, the legislature by enacting CCR has indicated that it considers such a regime beneficial despite these concerns. In our view, it seems that the CCR regime cannot be effective unless there is an element of reciprocity, as demonstrated by the lack of industry participation in CCR to date. We acknowledge that there are some benefits of the PRDE. At the very least it is a positive step towards having a single source of free credit reports for consumers, and it is likely to improve consistency in data reporting and competition amongst credit reporting bodies (CRBs). However, we wish to provide some alternate views on a number of the other public benefits articulated in ARCA’s application. In our view, CCR may be detrimental to consumers, particularly those who are financially excluded and marginalised, meaning transparency and enforceability of any reciprocity arrangement is imperative.

Our key concerns are that the PRDE does not resolve the critical problem of consistency in treatment of hardship variations on credit reports, and that the proposed PRDE may interfere with legitimate settlement negotiations that relate to the listing of credit defaults. Briefly, this submission also argues that:

  • the PRDE may result in increased lending, thereby increasing the overall number of consumers in default;
  • while the PRDE is likely to reduce costs for some consumers, this will unlikely be the result for Australia’s most vulnerable and marginalised consumers and may exacerbate financial exclusion;
  • licensed credit providers (CPs) cannot rely on a comprehensive credit report to comply with their responsible lending obligations, nor can the financial regulator rely on a report to enforce these obligations;
  • lower credit default rates are more a function of lender‟s risk appetite rather than a reflection on the quality of information provided to lenders;
  • the PRDE will only be effective if the vast majority of CPs sign up to it;
  • we are not convinced the monitoring, reporting and compliance process in the PRDE is sufficiently independent and transparent; and
  • a comprehensive review process is needed to ensure that the PRDE is actually in the public interest.

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Submission to Treasury about the Financial System Inquiry Recommendations

The Financial System Inquiry (FSI) Final Report was released in December 2014. Financial Rights has made a submission to the Treasury as part of consultation on the final report.

We did not comment on all 44 recommendations made by the FSI Panel, but we did support (with detailed commentary) the following recommendations:

16 Clearer graduated payments regulation

18 Crowdfunding

19 Data access and use

21 Strengthen product issuer and distributor accountability

22 Introduce product intervention power

23 Facilitate innovative disclosure

24 Align the interests of financial firms and consumers

25 Raise the competency of advisers

26 Improve guidance and disclosure in general insurance

28 Execution of mandate

29 Strengthening the Australian Securities and Investments Commission’s funding and powers

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Submission to LIAWG re life insurance advice and remuneration

The Consumer Action Law Centre, Financial Rights Legal Centre, Choice and Maurice Blackburn Lawyers jointly commented on the Interim report from the Life Insurance Advice Working Group about adviser remuneration and quality of advice.  The LIAWG Interim Report responds to a report by ASIC released in late 2014 which blames upfront commissions for the poor quality of advice that ASIC found when reviewing the industry.

Summary of our remarks:

  • We welcome the interim report’s recommendation to remove full upfront commissions and comments that the life insurance industry takes the problems with commission-based selling seriously.
  • However, we do not think the report has taken the problem of commission sales seriously enough, and we are disappointed that all remuneration options considered are commission based.
  • We do not agree that commissions are necessarily required to sell life insurance advice. The challenge of moving away from commissions is a problem with the culture of advisers, not necessarily a problem with consumers.
  • We recommend that the final report consider non-commission based remuneration options in more detail.
  • We strongly support the development of an industry code of practice that is approved by either ASIC or the ACCC.
  • A well designed ‘standard cover’ regime will offer part of a solution to the concerns about quality of advice raised in ASIC Report 413.
  • We are concerned that Approved Product Lists will tend to limit effective competition and mislead consumers.
  • We support the adoption of ASIC’s Life Insurance and Advice Checklist by the life insurance advice industry.

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Submission to ASIC on Facilitating Electronic Financial Services Disclosures

Financial Rights responded to ASIC’s Consultation Paper regarding electronic disclosures by overall supporting the its proposals. Our submission outlined several specific concerns and made one over-arching proviso: that the overall result of any changes is to improve consumer understanding of the benefits and limitations of the financial products and services they are in investing in.

Recent ASIC research has shown that a majority of consumers of insurance do not read their product disclosure statements, or if they do, they do not understand all important information being disclosed.  Our submission to ASIC emphasised that if ASIC is going to allow financial services providers to use a greater range of electronic methods to deliver disclosure information, those method needs to be tested to ensure that they are enhancing consumer understanding, not making it worse.

The proposals within this Discussion Paper have the potential to save industry significant sums in printing and postage of disclosure documents. We submit that some of the resources freed up in this way must be redirected to improving consumer understanding of the products they are purchasing. Financial Service Providers must take some responsibility for testing whether their customers receive and comprehend vital disclosure information.

Specific Concerns:

  • We opposed changing the default setting to electronic disclosure. Consumers should be given a choice about their preferred method of communication.
    • Consumers should not be sent all important notices and disclosures electronically simply because they gave the FSP their email at some point, they should be asked to give specific consent to receive notices electronically.
    • There are privacy and reliability problems with email disclosure. o Too many disadvantaged groups still don’t have reliable access to email.
  • Consumers should not be charged for opting to receive paper copies of legally mandated disclosure.
  • Critical notices like direct debit failures or insurance renewals should require a response if sent electronically, and if no response is received, alternate methods of communication should be attempted (postal notice, phone call, SMS)
  • We are strongly opposed to any marketing material being included with or linked to mandated disclosure material.

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Submission to Interim report on Retail Life Insurance Advice

Consumer Action, Financial Rights Legal Centre, Choice and Maurice Blackburn Lawyers have provided comment on the Interim report on Retail Life Insurance Advice. In brief, the submission argues:

Remuneration:

  • We welcome the interim report’s recommendation to remove full upfront commissions and comments that the life insurance industry takes the problems with commission-based selling seriously.
  • However, we do not think the report has taken the problem of commission sales seriously enough, and we are disappointed that all remuneration options considered are commission based.
  • We do not agree that commissions are necessarily required to sell life insurance advice. The challenge of moving away from commissions is a problem with the culture of advisers, not necessarily a problem with consumers.
  • We acknowledge that the remuneration options must be considered in the context of improving the underinsurance problem in Australia.
  • We recommend that the final report consider non-commission based remuneration options in more detail.

Code of practice

  • We strongly support the development of an industry code of practice that is approved by either ASIC or the ACCC.
  • A code should be developed in compliance with the guidance in ASIC Regulatory Guide 183, and through an open, consultative process.
  • A code should set standards for the entire industry (including insurers, licensees and advisers, with additional tailored standards for licensees and advisers).

Quality of Advice: We are concerned that Approved Product Lists will tend to limit effective competition and mislead consumers. We are especially concerned about the continuing practice of vertically integrated advice whereby advisers recommend investment products of entities to which they are associated to the exclusion of better performing non-affiliated products.

Disclosure: The over-elaboration of compliance requirements has resulted in economic risk shifting from the providers of financial products to consumers. There has been no consumer testing of whether current Statements of Advice (SOA) are effective, and significant risks are not adequately explained to consumers.

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Submission to the Treasury on the Insolvency Law Reform Bill

As a community legal service providing both legal advice and financial counselling to the public, we receive many calls about personal bankruptcy and other insolvency options under the Bankruptcy Act.  We generally support any provisions which will make Trustees more accountable. However, we note that the commentary in the Explanatory Memorandum is almost exclusively about the rights of creditors, and accountability to creditors. In our Submission we note that debtors and bankrupts are fundamentally affected by insolvency laws, and their perspective should be balanced with the needs of creditors.

We support the creation of a Register of Trustees as described in the Explanatory Memorandum. We also support the more prescriptive requirements of Trustees seeking registration or renewal and the changes to the disciplinary powers of the Inspector General.

The main points in this submission were:

  1. To make observations about the difficulties encountered by debtors in challenging Trustee’s remuneration and other expenses and make recommendations for improvement.
  2. To outline some deficiencies in the obligations placed on trustees in relation to Part X Agreements.

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Response to Draft Report of the Productivity Commissions Natural Disaster Funding Inquiry

Financial Rights Legal Centre submitted a response to the Productivity Commission’s Draft Report on Natural Disaster Funding Arrangements.  The submission focused on encouraging better transparency of insurance premiums and creating a mechanism of review for consumer’s in relation to insurance premium pricing. Insurers should not be able to hide behind vague reasons and unsubstantiated assertions about how premiums are priced. They should have to substantiate premium pricing across all forms of insurance.  In the home and contents space it is essential.

In our view, the failure of industry to have any mechanism of review of the accuracy of premium calculations is of significant detriment to consumers. This failure also provides no guarantee that any household mitigation strategies or idiosyncratic household conditions are taken into account when determining premiums. Consequently, premium prices cannot be said to be “accurate” signaling of risk as there is no contestability or transparency in their calculation.

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Response to Interim Report of the Financial System Inquiry

Financial Rights Legal Centre submitted a response to the Financial System Inquiry’s Interim Report with over 40 Recommendations for improving financial services in Australia.  The submission focused on consumer outcomes in the insurance sector, particularly improving disclosure regimes, increasing transparency in premium pricing, implementing the recommendations in the CHOICE and Trowbridge reports and creating suitability requirements for insurance products.

The submission also comments on competition in the payments and banking sectors, payday lending, industry self-regulation, consumer compensation schemes, increased powers for ASIC and Financial Difficulty Predator Businesses.

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Review of proposed changes to FOS’s Terms of Reference

Financial Rights and Consumer Action wrote a joint submission to the Financial Ombudsman Service commenting on the proposed changes to its Terms of Reference.

The submission supports the proposed new one-step lodgment process; new discretionary powers to kick out paid consumer agents; a new fast track ‘Adjudicator’ process for low value disputes; shorter objection time-frames for Outside Jurisdiction cases; increased limit for uninsured 3rd party accidents ($5000); and discretion to allow sale of asset. The submission rejects FOS’s proposal to limit its own jurisdiction for rating factors on premium/excess decisions.

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Natural Disaster Funding Arrangements: Submission to the Productivity Commission

The Financial Rights Legal Centre has provided a submission to the Productivity Commission on its Issues Paper, Natural Disaster Funding Arrangements.

The key points and recommendations made in this submission are:

  • Financial Rights submits that our Insurance Law Service is well-placed to act as a national insurance advice hotline and referral service in times of natural disaster.
  • Consumers must be able to assess and understand their insurance coverage. The disclosure process needs to be markedly improved with research and testing to ensure consumers understand their cover and exclusions
  • Independent and government funded comparison websites that compare both price and coverage are essential
  • Publicly available and extensive independent information on risk (through a website) is necessary
  • The NDIR review recommendations should be adopted in full, including the compulsory cover for all disaster events, premium discounting to avoid cross-subsidisation and government top ups in the event the reinsurance pool is insufficient.
  • Data needs to be obtained from the insurance industry on the extent of non -insurance with the data analysed and compared to risk of natural disaster
  • Consumers need disclosure about changes in pricing including compulsory disclosure of any reasons that would be relevant to a request pursuant to s. 75(1)(d) of the Insurance Contracts Act.

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Access to Justice (Response to Draft Report): Submission to the Productivity Commission

Some of the key points and recommendations made in this submission are:

  • Each State and Territory should fund a national referral service with a widely recognised single entry point for legal referral. However, the aim should be to evolve this national number into a multi-disciplinary team.
  • We support findings by the Commission that industry ombudsmen meet legal need in a way that is fast, effective and free of charge for consumers.
  • We broadly support the PC that the profile of ombudsman services should be raised, but targeting information so that it reaches people at the point they need it the most will be more effective than blanket exercises to raise awareness.
  • We support the proposal to consolidate industry ombudsman schemes in appropriate cases, as long as doing so does not leave consumers without another accessible option, or reduce the level of expertise in dispute resolution.
  • The PC should acknowledge that there are a broader range of scenarios in which legal representation will improve efficiency and access to justice in tribunals.
  • Costs awards in lower courts should have a standard basis that is clear to parties and their advisers at the outset of litigation.
  • Parties represented pro bono should be entitled to seek an award for costs. For the avoidance of any doubt it should be clarified at law that Community Legal Centres and their clients are similarly entitled to recover costs.
  • We believe the lawyer acting should be the beneficiary of any cost award.
  • Courts should grant protective costs orders in appropriate public interest cases, and that courts should formally outline the criteria for granting these orders. Protective costs orders should not just be available against government entities, but against private parties too.
  • While there may be opportunity in alternative not-for-profit legal assistance models, we caution against any argument that self-funded services are the solution to ‘the missing middle’, or that they can replace the need for government funded services.
  • We support the use of legal health checks as part of a multifaceted approach
  • We suggest co-location of services and systems (like Consumer Action and CCLC’s legal and financial counselling services, together with worker advice lines) are more effective than referrals between organisations
  • Emphasis in the Draft Report on the consistent application of eligibility criteria to ensure limited legal assistance funding is well targeted. However, eligibility criteria is only one part of effectively targeting services;
  • Better service delivery must be informed by needs analysis. However, we submit that this analysis is best done collaboratively with services and done in a way that ensure continuous ongoing reflection on what works well for a service and why and what needs to be improved;
  • We emphasise the value of strategic advocacy and law reform activities by CLCs and LACs. CLCs play a key role in identifying and acting on systemic issues and these activities are an efficient use of limited resources.

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Inquiry into Debt Recovery in NSW: Submission to the NSW Legislative Assembly

Consumer Credit Legal Centre has made many prior submissions to the NSW Attorney General department regarding debt collection.  We are disappointed that despite apparent support for many of our proposals, none of our recommendations were ultimately implemented.  NSW currently has the lowest protections for debtors, well below the equivalent statutory protections in other jurisdictions. Summary of Recommendations in this submission:

  1. Debtors should be provided with notice when a court judgment is entered, and prior to enforcement action taking effect
  2. The protected amount debtors can retain for essential living expenses should be increased from the current level of $458.40 per week
  3. Courts should exercise discretion in determining the appropriate proportion of wages to be garnisheed, taking into account an individual’s particular circumstances (such as number of dependents, living expenses and other financial commitments)
  4. The length of time a garnishee can operate should be limited to 6 months
  5. There should be legislative protection against a debtor losing their job as a result of a garnishee being issued
  6. There should be a minimum protected amount reserved for a debtor’s essential expenses that creditors cannot access, set in line with the minimum protected amount for wage garnishees
  7. Courts should be given discretion as to the appropriate amount to be garnisheed, considering the debtor’s whole circumstances
  8. There should be greater court oversight over the use of debt garnishees in an oppressive manner, or as a fishing expedition
  9. The categories of personal items not available for forced seizure and sale by the sheriff, should be aligned protections provided under the federal Bankruptcy Act 1966
  10. Sheriffs should have discretion to seize and sell property to balance the need to avoid delay and expense with minimising hardship to the debtor or other persons.

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Financial Systems Inquiry Submission

The financial system has the potential to create significant benefits for (or cause significant harm to) the community as a whole, or particular groups within it. As a service advising and assisting thousands of consumers every year, the CCLC is well placed to comment on both aspects of the system – where it is working well and where it is failing end users. Our submission strongly endorses the comments submitted by the Consumer Action Law Centre on 31 March 2014. Main recommendations in submission:

  • The availability of free, independent, ASIC approved EDR should remain a key component of the financial services landscape. Any issues with the process should be addressed through the regular independent reviews required to retain such approval.
  • The NCCP (Act) 2009 architecture should remain largely unchanged.
  • Unfair contract terms legislation should be extended to cover insurance.
  • Life insurance and TPD cover should be included as the default position in superannuation accounts (with greater regulation of life insurance).
  • Better tools for consumers to compare policies
  • Improved regulatory tools for preventing the systemic sale of poor value insurance products to vulnerable consumers
  • The pay day lending provisions should be retained unless they are replaced with even more stringent requirements aimed at reducing repeat borrowing.
  • There should be greater availability of safer, affordable small loan products.
  • ASIC’s role in identifying and making recommendations to government in relation to gaps in the law should be explicitly recognised and retained. Responsibility for the enforcement of credit reporting regulation should be transferred to ASIC.
  • All commercial entities involved in regulated credit advice, negotiations, credit reporting and personal budgeting/repayment services should be subject to licensing, EDR and specific tailored provisions to improve outcomes for consumers (and prevent the identified harm).

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Introduction of Personal Insolvency Fees: Submission to AFSA

We strongly oppose the introduction of Debtor’s Petition fee.  This new $120 fee will have very serious consequences for our clients, their creditors, and the wellbeing of their families and the health of the communities they live in. The majority of clients that we advise about filing for bankruptcy are on very low incomes, and by the time they are contemplating bankruptcy they are in severe financial hardship. Key points made in our submission:

  • A scan of our casework records (including both our legal advice and financial counselling services) reveals that we have on record at least 1600 calls from low income and vulnerable clients relating to bankruptcy per year. Of those callers 62% report they are living on an income of less than $26,000 per annum (with some reporting no income at all).
  • For this group of debtors a $120 fee to file for bankruptcy will be a significant financial burden.
  • One of the inevitable consequences of the new fee for lodging a Debtors Petition is that fewer debtors will file for bankruptcy.  This will be a terrible result for everyone from creditors, to the debtor’s family to the community at large.
  • Another consequence of introducing a fee for lodging a Debtor’s Petition is that debtors will be forced to incur more debt in order to come up with the $120 fee.
  • Charitable organisations will likely carry the burden
  • If a fee is introduced for lodging a Debtor’s Petition, there should be a waiver for low income debtors
  • The bankruptcy regime already imposes an income contribution requirement that is tied to income and number of dependents, and is recovered from post bankruptcy income rather than set up as a barrier to entering bankruptcy in the first place.
  • The Realisation Charge is a more appropriate way for AFSA to recover its personal insolvency costs

Since the submission of these comments to AFSA the proposed new fee has been disallowed in the senate and removed from the Debtor’s Petition Application.

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Motor Vehicle Repair Industry: Submission to the NSW Parliament

Key points made in our submission:

  • Overall, complaints to the ILS about quality of car repairs is an ongoing issue. The process for getting poor repairs fixed is difficult and may involve the cost to the consumer of getting independent assessors. Consumers often indicate they have little trust or confidence in the repair industry.
  • In our experience, the two biggest problems for consumers in this area are increased cost and hardship while awaiting repairs, and limited right of appeal of an assessor’s decision to write off or not write off a vehicle.
  • Where a third party is claiming against an insurer for damages it needs to be clearly disclosed to the consumer that the insurer can list the car as a total loss (write off) on the register
  • Consumers have little knowledge or awareness of their rights in relation to dealing with insurers and consequently their rights in relation to repairs carried out under a contract of insurance.
  • Issues commonly arise in relation to timeliness of repair, quality of repair and the transparency of the decisions in relation to the assessment of the claim. Insurance contracts will often limit an insurers liability in circumstances of delay.
  • Regulation and transparency of assessment in our view is key to ensure fair outcomes for consumers, whether products are vertically integrated or not.

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Debt Collection Guidelines: Submission to ASIC & ACCC

The Consumer Credit Legal Centre (CCLC) supports the regular revision and updating of the Debt Collection Guideline. It is important that the Guideline is updated on a regular basis to account for changes to the law, recent decisions and ongoing improvement in practices and industry standards. The revised draft Guideline is a significant improvement on the existing version, especially the recognition of the need for additional protections for low-income debtors.

CCLC notes that the Guideline is not law, and only represents guidance. In our view, consideration should be given to the Guideline being made into law. The debt collection industry is very large and pervasive, and unfortunately not all debtors subject to debt collection activity have access to EDR. CCLC has ongoing problems with a number of smaller debt collectors who continually breach the Guideline with no consequences. Some of the breaches are very serious, including threatening the consumer that s/he will be reported to the Police. We contend that legislation is required to ensure that all consumers have adequate consumer protection when dealing with debt collectors.

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Access to Justice Arrangements: Productivity Commission Submission

The Consumer Credit Legal Centre has provided a submission to the Productivity Commission on its Issues Paper, Access to Justice Arrangements.

 The key points and recommendations made in this submission are:

  • The service delivery model used by CCLC is a very effective and efficient method of addressing legal and related need and enhancing access to justice in relation to credit, debt and other financial services issues.
  • There is still considerable unmet need in relation to credit, debt and insurance law in Australia.
  • Credit legal services should be integrated with telephone financial counselling and referrals across Australia.
  • Community Legal Centres can use their resources to best effect when they use the intelligence gained from casework and service provision to advocate for systemic solutions. This should be explicitly recognised and incorporated into funding models, including reporting and evaluation.
  • Access to external dispute resolutions services like the Financial Ombudsman Service and Credit Ombudsman Service are vital to access to justice – and are arguably the greatest addition to consumer protection in Australia in many decades. Current problems with delays in such schemes are not insurmountable and in the process of being addressed.
  • The Insurance Law Service operated by CCLC is ideally placed to perform a central role in responding to national disasters but is underfunded to do so. A greater (but still modest) contribution from the Commonwealth and a per capita contribution from each State and territory could increase funding to necessary levels.
  • Filing fees and court procedures (or proposed changes to procedures) are creating barriers to pursuing public interest litigation in some cases.

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Financial Services Inquiry: Submission on the Draft Terms of Reference

Consumer Credit Legal Centre commented on the Draft Terms of Reference for the Financial System Inquiry. The Terms of Reference give broad scope to address a wide range of issues of concern to our organisation. (See Press Release from Treasury)

Our comments have been made in the interests of ensuring the inquiry, which is no doubt likely to be dominated by the concerns of financial service industry participants, keeps a firm eye on the end-users of the financial system. The financial system has the potential to create significant benefits for (or cause significant harm to) the community as a whole, or particular groups within it.

Summary of CCLC’s Recommendations

  1. The TOR should specifically mention access to the financial system or financial inclusion.
  2. TOR 2.1 should be amended to recognise that competition, efficiency and innovation are not objectives in themselves, but are only beneficial to the extent that they contribute to achieving optimal end-user outcomes.
  3. TOR 2.3 needs to include the benefits of regulation (to consumers, the market as a whole and the public interest) in addition to its costs and impositions; whether the objectives of the regulation are being met, and whether there are alternatives (including alternative regulation) that would meet the objectives more effectively.
  4. There should be a panel representative with experience and expertise in consumer policy and financial inclusion.

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Ban on Mortgage Exit Fees: Submission to the Treasury

Consumer Credit Legal Centre has contributed to the Post Implementation Review of the ban on mortgage exit fees. We continue to support the ban on exit fees as introduced through the National Consumer Credit Protection Amendment Regulations 2011 (No 2). The fees that these regulations prohibit are anti-competitive. Key points in our submission:

  • CCLC is of the view that termination fees, whether they be fees for early termination or deferred establishment has the effect of: Misleading consumers as to the cost of a loan; and Trapping borrowers in unsuitable loan products.
  • Consumers often reported being trapped in high interest loans, because they could not borrow enough to cover the exit fee upon refinancing. This left some borrowers in the position where they had to sell their homes even though they could have afforded a more competitive loan with lower repayments.
  • We contend that the bill has not had the anti-competitive effect that was forecasted by lenders.  The bill has been effective in enabling competition in the mortgage market whilst in turn enabling open, fair and transparent terms and conditions for borrowers in making choices and comparing products in the market place.  In our view, the ban has effectively removed one route for a lender to gouge a borrower without substantially affecting competition to the detriment of consumers. Rather, competition has become more transparent as consumers are able to more easily compare products and their associated costs. We also observe that a number of lenders advertise that there is a ban on mortgage exit fees to encourage shopping around for a better deal.

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Independent Review of FOS

Consumer Credit Legal Centre (NSW) and the Consumer Action Law Centre (Victoria) have coordinated and written a joint-consumer submission to the independent review of the Financial Ombudsman Service. The submission contains contributions from twelve other organisations, and received funding from the Financial Ombudsman Service.

Contributors broadly believe that, while there is room for improvement, the Financial Ombudsman Service is providing an essential service of a high standard and should be congratulated. This view was echoed in responses to the online survey of financial counsellors.

Case delays were by far the biggest concern for organisations who contributed to the submission and, while we acknowledge that Financial Ombudsman Service is making genuine efforts to reduce delay, we have provided a number of recommendations on this topic.

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Performance Review of ASIC

The Consumer Credit Legal Centre (NSW) has made a submission to the Senate Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission (ASIC).

Summary of Submissions

• ASIC has been a very effective regulator in the consumer credit space. It has been very active in the first few years of taking over this role from the State governments in 2010 and has taken some well target activities to address areas of likely consumer detriment.

• ASIC could do more to keep the market aware of its focus and compliance activities. Industry players need to be reassured that wayward competitors are under scrutiny where appropriate so that competitive pressures do not place downward pressure on compliance standards.

• ASIC needs to respond to consumer complaints in a timely fashion and, where timeliness is not practical, keep consumers (and their advocates) informed in some appropriate way.

• ASIC needs some better regulatory tools so that it can react in a timely and effective manner to prevent consumer detriment.

• We encourage ASIC to continue to conduct and foster research, gather evidence from complaints and surveillance activity, and work with consumer advocates and industry to develop creative solutions to problems and inform government about regulatory gaps or weaknesses in their enforcement capacity.

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ILS comments on Access to Insurance for low-income Australians.

The Insurance Law Service has commented on a recent paper on Insurance Access released by Good Shepherd Microfinance.  ILS agrees with Good Shepherd that limited availability, access to, and understanding of, insurance are significant contributing factors in financial exclusion for many Australians. It is generally understood that insurance is vital for protecting assets and securing a resilient future. Without insurance, it is not possible to accumulate assets safely and confidently or use everyday essentials such as a motor vehicle. Non-insurance also places huge burdens on society.  Good Shepherd is working on a project to insure sustainably a large number of Australians who are currently excluded from insurance or are unsure why or how the product could be of benefit to them.

In our comments to Good Shepherd we pointed out a number of insurance products that we believe are high-risk to low income Australians:

a.         Funeral Insurance

b.         Consumer Credit Insurance

c.         Gap insurance

d.         Insurance Products with Rising Premiums

We also pointed out that there are other types of insurance that disadvantage low income Australians because of their rising premiums. When someone is on a fixed low income it gets more and more difficult to afford to make rising premium payments. ILS submits that in many cases had low-income consumers known that the premiums were going to become unaffordable they would not have signed-up for the insurance policies in the first place.

ILS believes that a key issue for low income Australians and insurance is determining whether the premiums will be affordable for the required term of the insurance product. Consumers currently are not given this vital information.

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Joint-consumer response to the Credit Reporting Code

The CCLC recently submitted a 43-page consumer response to the proposed Credit Reporting Code written by CCLC staff, Carolyn Bond (formerly of Consumer Action Legal Centre) and Nigel Waters of the Australian Privacy Foundation.  Several other consumer advocacy groups have signed on to the submission including: Consumer Action Legal Centre, Australian Privacy Foundation, Consumer Credit Legal Service WA, Financial Counsellors of Australia, and the Australian Communications Consumer Action Network.  We had many concerns regarding the proposed code including its accessibility and readability for consumers.  The Joint submission made many recommendations for changes to the proposed code.

Major Recommendations:

  1. The CR Code must make it clear that Repayment History Information (RHI) can only be reported by credit providers licensed under the National Consumer Credit Protection Act and mortgage insurers
  2. The CR Code should include a commitment to fairness.
  3. Default listings must be removed immediately once the debt has become statute barred.
  4. The OAIC/Government is strongly encouraged to consult with stakeholders on the ongoing problems with credit repair companies with a view to consider further regulation.
  5. The CR Code should specifically require that all existing listings under $150 are removed on commencement of the Privacy Act.
  6. The CR Code must specifically ban:
    • Multiple default listings in relation to one debt
    • Listing a default again after a debt is assigned
    • Updating the amount of the debt on the default listing
  7. The CR Code must clarify and acknowledge that CP’s are subject to a range of regulatory requirements, including other legislation and Codes of Practice/Industry Codes and these continue to apply including when they impose a higher standard than the CR Code on a particular issue. The CR Code will identify where the Privacy Act sets certain legislative time limits.
  8. If account numbers are going to be used this information can only be disclosed in specified circumstances, for example, to the relevant CP and to the individual but to no other party.
  9. Clause 5.1 of the CR Code needs to clarify what administrative information can be disclosed, including in respect of ‘identifiers’ and the Code should expressly discourage the standardisation of account numbers across the credit industry.
  10. The CR Code should state that the notice of an intention to list a default must be issued between 30 days and 14 days before the default is listed.
  11. The amount of the default as notified to the consumer must be the amount listed on the credit report.
  12. The code should provide that consumers have the right to fully complete the application process for a free report online.
  13. The CR Code should specifically state that ALL CPs must be a member of an approved dispute resolution scheme that is free for consumers.
  14. The grace period before default should be extended from 5 days to 14 days.
  15. The CR Code should be monitored by an independent CR Code Compliance Committee, not audited by CRBs, who will have a conflict of interest.

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Joint Consumer Submission in relation to the Changes to Disclosure Requirements under the NCCPA

CCLC and CALC have submitted a joint response to the Treasury’s Discussion Paper regarding proposed changes to the format, content and timing of disclosure requirements under the National Consumer Credit Protection Act 2009 on both credit providers and lessors.  The changes are largely based on empirical research into pre-contractual disclosure that was commissioned by the Senate.  The proposals are framed by the following policy objectives:

  1. Making changes that will improve consumer understanding.
  2. Highlighting key pricing information in a new Table called the Financial Summary Table.
  3. Repealing existing unnecessary disclosure requirements.

Our joint submission largely supported the proposed changes that were a reflection of the empirical research presented in the recently released Uniquest Report.

Our submission includes suggested amendments to each of the following product-specific disclosure requirements:

  1. Home Loans
  2. Lender’s Mortgage Insurance
  3. Credit Cards
  4. Personal Loans (including Car Loans)
  5. Reverse Mortgages
  6. Consumer Leases
  7. Small Amount Loans (ie Payday Loans)

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Federal Court Fee Increases

The Consumer Credit Legal Centre has made a submission to the Sanding Committee on Legal and Constitutional Affairs. The CCLC strongly believes that the dramatic increases in federal court fees since 2010 have a negative impact on low-income and vulnerable Australians and act as a barrier to accessing justice.  Courts provide an essential public service and as the cost of accessing justice goes up, it is the most vulnerable parties that will suffer the consequences.  The party with the least financial resources will always be the one that is the most disadvantaged in our legal system.

Our submission recommends:

  1. Limits overall fee increases for litigants who are persons and not companies
  2. Extends the General Exemption from paying Court Fees to include individuals who are represented by a Community Legal Centre (CLC) or pro bono.
  3. Abolishes Deferral Systems due to the administrative burden caused.
    1. In the alternative, if deferral systems are to be kept then the following procedure should be used:

i.    All fees must be deferred for a pro bono or CLC represented party until judgment has been given, and

ii.    After judgment, fees are not to be taken from a pro bono or CLC represented party if:

  1. Judgment is given against the party, or
  2. Damages are not awarded or nominal damages are awarded, and costs are not awarded in favour of the party.

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Independent Review of the Centrepay Scheme

The CCLC recently had the opportunity to comment on an Independent Review of the Centrepay Scheme.  Centrepay is a voluntary free bill paying service for Centrelink recipients.  The service helps people budget for essential living expenses like rent and utilities.  It is quite popular among Centrelink recipients, and there are currently over 13,000 participating organisations that accept payments through Centrepay.

The CCLC believes Centrepay is an invaluable service provided for social security recipients.  The financial counsellors as well as the solicitors in our Centre agree that Centrepay is an important financial self-management tool for disadvantaged consumers and we strongly support its continued operation.  However, in light of its independent review we submitted some comments and concerns about the current administration of the Centrepay scheme.

Primary Concerns

  1. Centrepay should revisit its founding policy objective of assisting Customer financial self-management by enabling the payment of living expenses, which should only include certain priority goods and services.
  2. Retail/Consumer Lease companies for consumer goods should be removed from the Centrepay scheme or in the alternative be treated by Centrepay with increased scrutiny both in the application phase and necessary review of existing Participants.
  3. Other problematic Participants such as solicitors and funeral homes should be treated by Centrepay with increased scrutiny during the initial application phase as well as during subsequent reviews.
  4. An itemised list of all Centrepay deductions should be included on every Centrelink Statement provided to Customers whether generated automatically or after a customer request.
  5. There should be a better complaint mechanism for Customers and consumer advocates who have a grievance against a Centrepay Participant organisation.
  6. The amount of funds able to be deducted through Centrepay should not be capped.
  7. Centrepay should allow the deduction of mortgage repayments in limited circumstances.

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National Consumer Credit Protection Amendment (Credit Reform Phase 2) Bill 2012 (March 2013)

The CCLC has recently had the opportunity to make submissions in relation to Phase 2 of the National Consumer Credit legislative changes. As a whole the CCLC is extremely supportive of the Phase 2 Reforms. We were particularly supportive of the anti-avoidance and private lending reforms as these are areas where systemic avoidance of applicable credit legislation has been rife, causing considerable harm to vulnerable consumers.   We submitted that there were discrete changes to certain legislative language that  were still needed before this bill could be passed into law.

Primary Concerns

  1.  Anti-Avoidance provisions should be enacted as a priority, even if that means separating the other proposed sections and passing anti-avoidance legislation separately.
  2. We strongly support the drafting of the proposed Section 323A, although we made some minor recommendations for changes.
  3. We support the current amendments to Section 171 which remove the short term and indefinite lease exemptions currently in  Section 171 of the National Credit Act.
  4. We recommended changes to the current drafting of Section 171A(3) which classify ‘Rent to Own’ arrangements as indefinite leases and not as credit contracts.
  5. We support the extension of the National Credit Act to regulate private lending.
  6. We support the extension of the National Credit Act to investment lending but we are concerned that the provisions do not go far enough in relation to protecting borrowers with Regulated product (home-secured) investment credit contracts.

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Consumer Leases

The Consumer Credit Legal Centre has made a submission to the Commonwealth Treasury on regulation of consumer leases. The CCLC strongly agrees with the Treasury that the lease provisions in the Credit Act are now out of date in relation to the common use of leases. The decision in the original Consumer Credit Code to enact separate and less effective provisions for leases meant that the consumer lease industry developed business strategies to avoid the tougher protections for credit contracts. Currently, many consumers are in contracts that do not reflect the intention of the parties, with leases being sold as indistinguishable from loans but the consumer has no right to own the goods in the contract. Further, these contracts can be deceptively expensive.

Our submission recommends:

  • Enhanced disclosure for leases including :
    • Cash value of the goods
    • Amount payable under the contract relative to the cash value of the goods (as proposed)
    • A nominal interest rate for comparison purposes
    • Any ancillary services and products

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Point of Sale Retailer Exemptions

The Consumer Credit Legal Centre has made a submission to the Commonwealth Treasury in relation to the exemption of retailers from the National Consumer Credit Protection Act 2009 (Credit Act)The CCLC has not supported the exemption of Point of Sale (POS) retailers from the Credit Act at any time. The CCLC considers the exemption to be a large loophole in the current consumer protections under the Credit Act.We believe it is critical that the protections of the National Credit Act be extended to POS retailers that engage in credit activities in relation to the sale of goods and services, rather than allow this unsatisfactory gap in consumer protection to continue.

Our submission recommends:

  • ALL retailers (e.g. car dealerships, department stores that sell furniture and/or electrical goods) who engage in credit activities (arrange finance) should be regulated by the Credit Act, including:
    • Retailers who help arrange financing must either hold an Australian Credit License (ACL), or be appointed as a Credit Representative of someone who has an ACL
    • Retailers must join an External Dispute Resolution scheme
    • Retailers must meet Credit Act disclosure requirements and responsible lending obligations
    • Alternatively (as a second best option):
      • Car dealerships must either hold an ACL, or be appointed as a Credit Representative of one financier (with full disclosure about there only being one option available)
      • Other retail outlets (supplier representatives) would have modified obligations including-
        • EDR membership for the retailer (as opposed to individual staff members)
        • Modified responsible lending provided all financial details are taken directly from the consumer by the financier.

CCLC considers car yard finance an extremely high risk area for consumers and does not therefore support applying any modifications to the regulatory regime applying to other credit industry participants for car yard finance.

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Productivity Commission Review of the Consumer Protection Framework

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Financial Services and Credit Reform – Improving, Simplifying and Standardising Financial Services and Credit Regulation

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Responsible lending practices in relation to consumer credit cards

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Personal Property Securities Regulations

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Personal Property Securities Bill

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