Keep the protections: An opinion piece by CEO Chris Jones
If your house is on fire, you call the fire brigade for help. But if the firefighters have nothing to work with—no water, no hoses, no pressure—there won’t be a lot they can do to put out the flames.
For financial counsellors, responsible lending laws are critical for helping to save people from financial disaster. They are like the firefighter’s water.
Since 2009, Australia has had laws to protect people from exploitative lending by banks and other lenders. However, the Federal Government has just released a draft bill which would see these protections axed from March next year.
Anglicare Tasmania is part of a campaign by financial counsellors across Australia urging the Federal Parliament not to pass the proposed changes. In particular, Tasmanian Senators will have the opportunity to use their influence for good.
The current responsible lending laws provide critical consumer protections to deter lenders from providing unaffordable and unsuitable loans, and to offer redress for people when those laws were breached.
Axing these protections will hurt individuals and families. Remember the Banking Royal Commission and the many heartbreaking stories of vulnerable people harmed by irresponsible lending? At that time, the Royal Commission recommended that these laws be more strongly enforced, not rolled back.
Not only do these laws help to protect people from irresponsible lenders, but our financial counsellors also use them to find a way forward for people who—despite the protections—were still loaned money they are unable to repay. For example, our counsellors have provided support to an elderly Tasmanian with a serious mental illness who, confused and frightened by a scammer’s demands, was given a large personal loan and a significantly increased limit on a credit card. An appropriate financial assessment by the lender would have shown she did not have the capacity to repay these debts.
Using the current legal protections, our team has also negotiated a repayment plan and a reduction in debt for a person who accessed multiple credit cards and three personal loans while already ‘swimming in debt’.
Without the current legal protections, it is likely we will see more people pressured to sign up for high interest credit cards, car loans and mortgages they can’t repay. The proposed changes risk extending the COVID recession, damaging the economy and the quality of life for millions of people.
If you’re a Federal politician, you’ll be hearing from Anglicare Tasmania about this issue. We stand alongside Financial Counselling Australia and key consumer groups including Choice, Consumer Action Law Centre and the Financial Legal Rights Centre in speaking up about the vital importance of these laws.
There are around 950 financial counsellors working across the country right now who know exactly what the axing of these protections would mean.
Anglicare Tasmania is one of many organisations gearing up for an anticipated rise in demand for financial counselling services because of government decisions to reduce, then end JobKeeper payments. Loan deferrals and rent moratoriums are also finishing.
If, at the same time, the Federal Parliament takes away these important responsible lending protections, it will expose people to an increased risk of harm and make the job of our financial counsellors even more difficult. Don’t let us face a raging fire without any water.
We need the right tools to protect people from harm and avoid financial devastation.
Listen to the warnings of Australia’s financial counsellors—people motivated by compassion and fairness, not greed.
Unaffordable debt impacts physical and mental health, family wellbeing and the ability to pay for essentials like education and health.
Every day, our financial counsellors listen to people feeling overwhelmed by their debts. Some are suicidal. Some are considering bankruptcy, while others are on the verge of homelessness. This proposal would only increase the number of people who need help and experience harm. What’s most frustrating is that it is avoidable.
Don’t take away these vital legal protections. In the midst of a recession, people need them now, more than ever.
Financial counsellors provide free, independent and non-judgmental assistance to people in financial stress. Call the National Debt Helpline on 1800 007 007. You can also find out more at www.ndh.org.au
*this article appeared in Talking Point, The Mercury, on 18 November 2020 under the title “Stripping away responsible lending laws will hit battlers” (online version) and “Bracing for a blow to our battlers” (printed version).
Read Anglicare’s media release from 4 November 2020 here.