Submissions

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.

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)

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.

• These recommendations are in line with the NSW Civil Procedure Act 2005 and the “Guidelines for the waiver, remission and postponement of fees.”  Available at: http://www.lawlink.nsw.gov.au/lawlink/spu/ll_ucpr.nsf/pages/ucpr_publications

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.

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.

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

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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