Submissions

Consumer Data Right Rules as it stands and based on some of the proposals within this consultation is creating a situation where it disproportionately places on individuals the burden of their own safety online. This submission provides comment on the series of proposals for amendments to the rules, and provide comment on the standards’ changes, where relevant or needed.

In this joint response we provide feedback on the proposal to extend the small business responsible obligation’s exemption. We believe the small business RLOs exemption should expire, for the following reasons: lending that should be subject to RLOs can fall outside them under the exemption, the exemption opens the door to poor lending practices and small business operators experience many of the same vulnerabilities as consumers.

Every Australian should be able to access food and groceries at fair and reasonable prices regardless of where they live, but many remote communities face significant challenges in accessing affordable food and groceries. Communities living in remote areas should not be disadvantaged because of their geographical location.

Consumer advocates warmly support the proposal to introduce a Minimal Asset Procedure into Australia’s personal insolvency system. We recommend that the debt threshold be higher and seek clarification that the assets are in addition to existing allowances for tools or trade and a vehicle. Overall, we feel the proposal is largely appropriate for the clients we assist who are struggling with debt they will, for one reason or another, never be able to repay.

This is a supplementary submission to the joint consumer submission provided in June to the Independent Review of the General Insurance Code: Initial Consultation Paper. In that submission we provided information regarding our 2021 research examining whether general insurance code subscribers met not just the letter of the commitment but the spirit of the existing commitment at Clause 95 – i.e. the quality of the policies developed and what protections and commitments were being made to customers who may be subject to family violence. We have since updated our research.

This is a supplementary submission to our submission provided to the committee’s inquiry into the Financial Services Regulatory Framework in Relation to Financial Abuse, provided in June. In this supplementary submission we review and report on the findings of our updated Family Violence and General Insurance: Updated Desktop audit of family violence policies, August 2024.

This is a further supplementary submission to our previous two submissions provided to the committee’s inquiry into the insurers’ responses to 2022 major floods. In our first supplementary submission we recommended that the committee seek specific improvements to the self-regulated General Insurance Code of Practice to address the issues impacting consumers, particularly vulnerable consumers.

The extreme events since the Black Summer bushfires have brought to light fundamental challenges in accessing and affording insurance across Australia. Rectifying these problems with insurance will safeguard that it can be sustainable in the long term as natural disasters continue to increase in frequency and severity.

We believe Centrepay is an invaluable service provided by Centrelink 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, there are clearly some serious and systemic reforms that need to take place within Centrepay to ensure that it is a tool that helps customers and does not expose them to practices which undermine their financial resilience rather than support it.

The financial abuse victim survivors we assist commonly present to us with complex financial debts, to multiple providers, of different credit and/or insurance products. Sometimes they have debts owing as a direct result of financial abuse, through fraud, coercion to take on the debt, or entering debt because their abuser does not contribute to shared costs. In other instances, the debts can arise in the aftermath of financial and other abuse, as they try to escape or re-start a safer life. Whatever the cause, the challenge for people and their advocates is the same – a complex web of debt (or in the case of insurance, coverage) that needs to be unravelled and resolved, which can be difficult even without the added trauma of escaping an abuse situation. This submission gives an insight into the ways the financial services regulatory framework fails these Australians.

BNPL functions in largely the same way as other forms of credit, and carries the same risks. In recent years, BNPL has increasingly appeared in the debt mixes of people in financial hardship who seek assistance from financial counsellors, community legal centres, and other community services. As of mid-2023, financial counsellors reported that a majority of their clients had BNPL debts – and those clients that do had an average of three separate BNPL debts. The fact BNPL is not regulated as credit means these people in financial hardship currently do not have the same consumer protections as they would for other forms of credit.

There is a real opportunity now to recommend meaningful changes in consumer insurance. Every year that the Australian insurance industry and regulatory environment do not make the necessary systemic changes the costs of insurance and the amount consumer harm continue to grow.

Since the last review of the General Insurance Code in 2018, there have been 17 extreme weather event catastrophes and a pandemic all of which have tested the sector and found it to be wanting. The insurance sector needs to lift its game and the Code needs to be strengthened.

Australia’s credit reporting framework is a fundamental aspect of the financial infrastructure, enabling lenders to assess the creditworthiness of individuals and businesses. However, it is essential to review and adapt this framework to reflect technological, economic, and cultural changes; policy objectives; and consumer expectations. There have been major regulatory and commercial changes in the credit and debt space since the current credit reporting framework was put into place including since the last comprehensive review. The current regime is no longer aligned with Australia’s consumer credit arrangements or with consumer expectations.

Reforming the Emergency Services Levy (ESL) is unfinished business that needs to be resolved to ensure fairer outcomes for consumers and improve insurance affordability. We welcome the announcement that an insurance monitor will be appointed to ensure insurers don’t keep premiums at elevated levels once the ESL is removed. Key to this transition is the creation of a price monitor, independent of industry, and empowered to investigate, conduct research, and collect and collate information relating to pricing practices.

We strongly support treating BNPL as credit and regulating it as such under the NCCPA. Passing the framework contained in the ED Materials represents a dramatic improvement in the oversight of BNPL. Subjecting BNPL providers to a form of responsible lending obligations and empowering ASIC to regulate BNPL as credit is a necessary step that will reduce consumer harms currently being caused by BNPL.

General insurance needs to be urgently reformed to ensure consumers, government and industry work more effectively together to mitigate against various increasing risks. This is particularly the case in a world where insureds have, for decades, misunderstood the insurance products they hold because of long, confusing, incomprehensible, and inconsistent product disclosure. This has led to insureds holding inappropriate products for their risks, unwelcome surprises at claims time, and endemic underinsurance. Standardising insurance definitions and reforming standard cover are key to improving outcomes for insureds in this context.

We affirm our previous support for the designated complaints function, and our previous comments about the design and structure of the legislation in our joint submissions to Treasury and the Senate Legislative Committee.  Our major concern is about the determination’s prescribed limit of just three designated complainants. When combined with other limitations in the determination this will have a serious impact on the function and outcomes of the designated complaints regime.

This supplementary submission aims to provide further information to the committee with respect to two key issues: how the committee can ensure that the insurance sectors acts to improve their processes; and standardising insurance definitions.

Financial Rights believes that the CGC should maintain its focus on claims handling given the continued number of calls from policyholders to the Insurance Law Service seeking advice regarding poor claims handling.