RLC in the Media: banks on collision course with consumer groups over responsible lending

The banking industry has backed the Morrison government’s proposed changes to responsible lending laws, putting it on a collision course with nine consumer groups which have jointly signed a scathing review of the controversial reforms.

Richard Gluyas reports for the Australian

A submission by the industry’s peak lobby group, the Australian Banking Association, says the removal of barriers to accessing credit “strike the right balance between maintaining strong consumer protection while providing credit to the economy at a critical time”.

“Banks remain committed to the ongoing and efficient flow of credit to consumers and small businesses,” the ABA submission says.

“The reforms provide lenders with greater flexibility to make faster credit decisions.”

The ABA’s support for a big deregulatory push in consumer credit so soon after poor lending practices were a major focus of the 2018 financial services royal commission comes as no great surprise. However, the extreme language used by consumer groups in their 38-page submission is unusual. The group, which includes the Consumer Action Law Centre, Choice, Financial Counselling Australia and Redfern Legal Centre, says it normally provides constructive feedback in policy consultations. “Unfortunately, we are unable to say anything positive about the government’s plans,” it says.

"The repeal of responsible lending obligations for almost all forms of consumer credit is the most shortsighted, poorly thought-out policy proposed by a government in credit or financial services in recent memory.

“The draft materials are fundamentally defective, and no number of amendments can solve this.”

Read full article here (The Australian, 23 November 2020.)