ARCA consultation on variations to the Credit Reporting Code
This submission comments on proposed variations to the Privacy (Credit Reporting) Code 2014 (Version 2.3) including:
- Format of the CR Code
- Accommodating other entities reporting CCLI;
- Introducing positive obligations related to statute barred debts;
- Notification obligations;
- ‘Automatic’ requests for credit ban extensions; and
- Enabling correction of multiple instances of incorrect information stemming from one event.
CALI’s Life Insurance Code of Practice – v.2.1.1 Proposed Amendments Consultation
Financial Rights has signficant concerns with amendments made to the Life Code – introduced in transition ownership from the Financial Services Council to the Council of Life Insurers.
Department of Finance’s Digital ID Bill and Rules consultation
A key part of the work we do representing clients is working through the difficulties they may have with identification. Financial institutions, Commonwealth services, telecommunications companies and energy providers require customers to provide identity documents to access their services. However, some people cannot access traditional forms of documentation to prove their identity. This submission provides an overview of these challenges to provide the context for understanding how the Digital ID reforms will impact upon our First Nations clients, before commenting upon specific elements of the proposals.
Treasury’s Screen Scraping – policy and regulatory implications Discussion Paper
Financial Rights Legal Centre and Consumer Action Law Centre have consistently called for the banning of screen scraping for over a decade. Screen scraping may have been embedded in business models around the country for responsible lending checks, loan and hardship applications and other purposes, but it has done so in a regulatory gap that has enabled this dangerous and unsafe practice to flourish.
Consumer losses arising out of scams and poor data handling practices and breaches are at record levels year on year, harming the most vulnerable consumers in Australia. With this Australians are growing ever more aware and wary of poor data collection and handling practices. Screen scraping is one of, if not the worst data collection and handling practices being conducted by financial services firms.
Attorney General’s Department Personal insolvency Discussion paper
The inappropriately low existing forced bankruptcy threshold results in bankruptcy proceedings being used to aggressively pursue people for very small amounts, in lieu of collection options that are less stressful, humiliating and expensive for the debtor. This submission, endorsed by 12 consumer groups, argues that:
- The bankruptcy threshold should be $50,000
- Bankruptcy notices should allow a 60 day response period
- Listings on the NPII should align with credit reporting obligations (that is, removal 2 years after the bankruptcy is completed)
- While we support the debt agreement proposals in this paper, there is a broader discussion needed around additional personal insolvency options including a No Asset Procedure.
AFCA’s Appropriate Lending to Small Business Approach
Financial Rights is often working with consumers wrongly placed in business loans, who ought to have been afforded the protections provided under the National Consumer Credit Protection Act 2009. We also work with clients whose small business and personal finances are intermingled in ways that leads to our working with the limited rights and protections afforded small business borrowers. We welcome AFCA outlining its approach to small business lending.
AFCA’s responsible lending approach consultation
Currently some AFCA recommendations and even determinations in responsible lending disputes are inconsistent, which has led to some problematic practices and caused unfair outcomes for consumers. The Draft Approach addresses many of the concerns we have with approaches to responsible lending disputes taken at times by AFCA.
ARCA’s Credit Reporting Code variations consultation
This joint consumer submission responds to a consultation paper from the Australian Retail Credit Association on variations to the Credit Reporting (CR) Code. There are many CR Code variations that we support and are pleased to see the implementation process begin. While this submission did not respond to all of the consultation questions we did have views on the following proposals: Proposal 6: Accommodating other entities reporting CCLI; Proposal 19: Introduce positive obligations related to statute barred debts; Proposal 24: Notification obligations; Proposal 31: Require a CRB to record and alert an individual of access requests during a ban period; Proposal 37: Enable correction of multiple instances of incorrect information stemming from one event; and Proposals 39-41: Amend the mechanism for corrections due to circumstances beyond the individual’s control.
Treasury Laws Amendment (Consumer Data Right) Bill 2022
We are raising the following two high level concerns with the current Consumer Data Rights Bill and the intent to introduce action initiation processes to the consumer data right regime. Action initiation has the potential to increase scam and fraud activity in the context of few, if any, consumer protections or redress mechanisms for scam losses and it will exacerbate consumer harms borne of an already weak CDR consumer protection framework.
Treasury’s Strategic Plan for the Payments System
We consider the safety and resilience of the payments system to require urgent attention and intervention and outline the reasons for this below. The increasing prevalence of fraud and scams operating within our payments system in particular is a major concern for the clients we represent. Our casework experience indicates that there are a number of areas where the digitisation of banking and finance has created gaps in the security of the payment system that scammers can exploit.
Treasury’s Consumer data right in non-bank lending: CDR rules and data standards design paper
This joint consumer submission raises concerns with respect to Treasury’s approach to the Privacy Impact Assessment (PIA) for CDR’s application to the non-bank lending sector and argues for the need to conduct an independent PIA, external to Treasury which proactively consults with key stakeholders including consumer groups and privacy specialists by a reviewer expert and experienced in PIAs, the CDR and the comprehensive credit reporting (CCR) regime.
Treasury’s Regulating Buy Now, Pay Later in Australia, Options paper
This is a joint submission on behalf of 22 consumer organisations who make up the Close Lending Loopholes Coalition including Australia’s leading consumer advocates, charities, community groups, legal centres, family violence organisations, and financial counselling practitioners. Buy now, pay later (BNPL) credit products exploit loopholes in Australia’s credit law to sell people into unaffordable debt. This unregulated credit industry is causing serious economic and social harm to people, families and households across the country. At present, these harms far outweigh the benefits BNPL brings to the economy. We recommend Option 3 be implemented to apply full regulation of BNPL under the National Consumer Credit Protection Act 2009, and the National Credit Code.
ALRC Financial Services Legislation Inquiry – Interim Report B
Consumer representatives broadly endorse the legislative model for financial services set out in Interim Report B. We agree that reform to the legislative model will aid transparency and ease-of-understanding of the law. We provide support, however, on the basis that the scope of legislation is broad so as to address avoidant business models and that any exemptions and exclusions are as limited as possible.
Treasury’s Quality of Advice Review – Conflicted remuneration
Consumer groups are extremely disappointed with many of the proposals suggested by the Review. The Review has been presented with clear evidence that conflicts of interest contribute to poor-quality advice. Every major inquiry into the life insurance industry over the past decade has shown that the industry is plagued with conflicts of interest that contribute to poor quality advice to consumers.
Senate Economics Committee: Financial Sector Reform Bill 2022 – consumer credit reforms
Our organisations strongly support the content of Schedule 4 of the FSR Bill, which would implement the recommendations made in the final report of Treasury’s 2016 Independent Review of Small Amount Credit Contracts.
Senate Standing Committee on Economics re:the Financial Accountability Regime and Compensation Scheme of Last Resort
Consumer groups strongly support the passage of a well-designed Compensation Scheme of Last Resort and Financial Accountability Regime. These reforms are landmark recommendations of the Banking Royal Commission and are missing links in Australia’s financial services framework.
Treasury’s Quality of Advice Review – Proposals Paper
The Quality of Financial Advice Review’s Proposal Paper recommendations would weaken core consumer protections and fuel the provision of poor quality advice by vertically integrated institutions. They would incentivise major banks, insurance companies and superannuation funds to provide conflicted sales pitches dressed up as advice. Consumer groups strongly support the retention of a principles-based best interests duty. This is a critical consumer protection that requires financial advisers to act in the best interests of clients, not their own, and to face significant penalties where they fail to do so. The proposed watering down of the best interests duty to an obligation to give ‘good advice’ will push financial services regulation back decades.
Treasury’s Independent Statutory Review of the Consumer Data Right: Issues paper
The implementation of the Consumer Data Right (CDR) needs serious reconsideration in order to place the interests of the consumer back into the centre of the regime – that is their interest in both obtaining benefits from their own data but also – and more importantly – their interest in a safe, secure and trustworthy data handling regime. Currently the CDR is less a consumer data right and more of a right for business to access consumer data, perpetuating an over-reliance on a deeply flawed consent and disclosure model.
Treasury’s Consumer Data Right Sectoral Assessment for the Open Finance sector – Non-Bank Lending
The application of the CDR has the potential to provide opportunities for greater financial inclusion if done with appropriate guide rails. However these benefits do not exist in a vacuum. They must be balanced with an understanding of the sector the CDR is about to be applied to and the very real potential for it to exacerbate existing consumer harms and introduce new harms, if not appropriately constrained and mitigated.
It is important to acknowledge that the non-banking sector serves different demographics, functions and purposes in the financial services sector. There are companies operating in this sector that have historically contributed to substantial consumer harm, and are not accountable to industry codes of any real value.
Applying the CDR to the non-banking sector should be done with these issues clearly in mind with risks appropriately mitigated.
Attorney-General’s Options paper: Possible reforms to the bankruptcy system
This joint submission led by Financial Rights makes 11 recommendations including keeping debt agreements limited to three years. The submission also comments on outstanding issues in personal insolvency and advocates for better support for victim / survivors of family violence. Broad support is given to the proposal to reduce the default term of bankruptcy to one year but advocates for a commensurate reduction in the duration of bankruptcy on credit reports.