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).