Rushing stricter payday lending criteria through the Senate door

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on September 28, 2020
Rushing stricter payday lending criteria through the Senate door

Source: Wikimedia Commons

Consumer Action has flagged concern about the potential rollback of responsible lending criteria when it comes to payday lending.

Already there is a private members' Bill in the Senate proposing stricter lending criteria on small amount credit contracts (SACCs, also known as payday lending), and consumer leases (also known as rent-to-buy). 

Such restrictions would include a maximum payments cap for rent-to-buy schemes, and equal repayment and payment intervals for SACCs, among other criteria.

Consumer Action CEO Gerard Brody said the Senate Bill "should be passed as a matter of urgency", after a rollback in responsible lending criteria was announced for home loans last week.

“The Government and Treasurer Josh Frydenberg are putting the interests of banks and predatory payday lenders before those of everyday Australians, as the economic fallout of COVID-19 worsens,” Consumer Action CEO Gerard Brody said.

"Unaffordable credit will destroy our economy. These proposals are the kind of short-sighted thinking that led to the Global Financial Crisis."

However, as it stands, the announced rollbacks do not extend to payday lending and rent-to-buy schemes.

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          Westpac's credit strategy team said despite the rollbacks, they expect demand for credit to remain subdued in many segments.

          "As always, the devil will be in the detail, and a consultation process will now be implemented before final legislation is put in place," they said.

          "However the move has the capacity to ease both the administrative and regulatory burden on the banks at a point in the cycle where regulators and governments are seeking support to maintain the flow of credit to the broader economy under exceptional circumstances."

          Mr Brody said the rollback in the home loans space sets a precedent.

          "The intended watering down of vital protections recommended by the SACC Review will defeat the purpose of the whole reform,” he said.

          "The only explanation for these changes is that the Government has bowed to the sustained lobbying by industry. The ongoing delays and pandering to industry interests is simply unacceptable."

          Bill finds critics

          The National Credit Providers' Association (NCPA) has hit back at the Senate Bill, soon after Consumer Action lamented the potential easing of credit regulations.

          NCPA chairman Michael Rudd said such reforms could end up disadvantaging consumers and exclude them from accessing credit.

          "This makes no sense at a time when the Treasurer is saying to banks for a loan of $500,000 responsible lending laws are being relaxed and it's buyer beware, but for the same consumer who wants to borrow $500, they are making it harder and more expensive," he said.

          "This is 'nanny state stuff' in the extreme and not what you would expect from the Liberal Party, the party of free enterprise.

          "Instead, these reforms for the SACC sector will have the opposite effect and push more people to unregulated lenders who provide harmful products and are often misrepresented through the media and consumer advocates as SACC providers."

          Mr Rudd is also the CEO of Commit Co, a payday lender.


          The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.,,, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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          Harrison is's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.


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