- Australians filed some 31,000 complaints about lending products after the banking royal commission, according to new CHOICE analysis.
- The consumer advocacy publication issued those findings in a last-ditch attempt to argue in favour of responsible lending regulation, which could be repealed within days.
- A report from the Senate Standing Committee on Economics, released Friday, broadly supported the rollback.
- Visit Business Insider Australia’s homepage for more stories.
Australians have filed some 31,000 complaints about lending products since the banking royal commission began, according to new CHOICE analysis released days after a Senate committee recommended the rollback of responsible lending legislation.
In a new statement, CHOICE says it has tallied thousands of complaints made to the Australian Financial Complaints Authority (AFCA) since 2018, with borrowers raising issues with mortgages, personal loans, and credit cards.
Allegations of irresponsible lending, fraud, and unfair terms lodged in the fine print prove Australia’s lending regulation must stay in place, said CHOICE CEO Alan Kirkland.
“That shows the scale of problems with lending in the banking system, and it shows just how important it is we have laws that create a level playing field when you’re dealing with your bank,” he said.
Treasurer Josh Frydenberg argues the rules, instituted after the 2009 global financial crisis, are stifling Australia’s economic recovery from the COVID-19 pandemic by wrapping credit approvals in needless red tape.
The Senate Standing Committee on Economics report, released Friday, broadly agreed with Frydenberg.
The Committee found the rollback “will not undermine consumer protections and that the principal of ‘responsible lending’ is deeply embedded in Australia’s broader regulatory framework.”
The laws mean some borrowers are “unable to access credit in a timely manner to buy their first home or to obtain a grant under the HomeBuilder scheme,” the report added.
But Kirkland states the proposed repeal “contradicts the very first recommendation of the Banking Royal Commission – to leave safe lending laws intact.”
The Committee report also noted AFCA provides “efficient resolution of complaints and redress for consumers who need it.”
CHOICE takes a different view, saying the repeal will unduly limit the ability of the Australian Securities and Investments Commission and individual borrowers to take lenders to court.
Through weeks of public hearings, consumer advocates also told the Committee that sky-high home loan approval rates show the repeals are unnecessary.
“The banks are going to be the winners if we remove these rights,” Financial Rights Legal Centre coordinator Karen Cox told the Committee earlier this month.
The repeal will likely be put to the Parliament this week, where it’s likely Senate cross-benchers could have the final say on the contentious amendments.
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