Earlier this year, the ABC reported that almost half of Radio Rentals’ $197 million worth of profits came from Centrelink payments.
In June this year, Shadow Minister for Human Services, Senator Doug Cameron, introduced a bill to prevent rent-to-buy companies having access to Centrelink payments through the Centrepay direct debit system.
Senator Doug Cameron’s bill passed the Senate on Thursday 10 September, however still needs the support of the lower house.
Redfern Legal Centre supports Senator Cameron’s proposal. It is an important step to prevent rent-to-buy companies’ exploitation of vulnerable and marginalised consumers who rely on Centrelink income.
Centrepay is Centrelink’s automatic payment manager and operates like a direct debit system for Centrelink payments. It was originally designed to help Centrelink recipients manage payments of their rent, utilities and basic services, however it is also being funnelled into rent-to-buy companies like Radio Rentals.
The bill follows a recent report by the Australian Securities & Investment Commission that found that Centrelink recipients are often paying higher amounts for consumer leases.
RLC has found exploitation through rent-to-buy agreements is a common occurrence. The agreements are marketed towards people who are financially vulnerable, when in fact they are the most expensive way to buy basic goods or access consumer credit.
Good Shepherd have found rent-to-buy arrangements companies share many similarities with pay day lenders.
On average, consumers end up paying more than three times the retail price and because it is a lease arrangement often don’t end up owning the goods.
Further, RLC welcomes the government’s review of the small credit contract (SACC) laws and the proposal to increase regulation of rent-to-buy agreements.
RLC is currently preparing a submission to the review, identifying the need for upfront disclosure about the total cost and effective interest rates Centrelink recipients would be required to pay under any new changes to the SACC laws.
