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Thursday, 20 August 2009
Page: 8500


Mr HAYES (11:18 AM) —This government is implementing a credit reform package that delivers the government’s commitment to nationalised consistency and the modernisation of Australia’s credit laws. The package will for the first time in this country provide one single standard of a nationally consistent regime that will apply for consumer credit regulation. That is very important, particularly for those of us who represent the mortgage belts within our respective electorates and for those of us who have a significant number of our constituents involved in securing credit for running their lives and their families. The other thing to bear in mind is that this also applies in relation to those of our constituents who are involved in small business. So this is very significant and something that the House should take note of. The national consumer credit protection package comprises three bills: the National Consumer Credit Protection Bill 2009, the credit bill; the National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009, the transitional bill; and the National Consumer Credit Protection (Fees) Bill 2009. This credit reform package has substantial benefits and its implementation is, quite frankly, long overdue. Significantly, the package will provide for an improved consumer protection regime and will move to cut the red tape and the inconsistencies that have emerged in the business practice of providing credit.

The package has its genesis in the reforms that followed that historic COAG meeting of October 2008, where there was agreement to implement a two phased approach for the Australian government to take over responsibility for regulation of consumer credit. That is quite a significant change. Some may refer to that as a modern federalism but, in an economy underpinned by 21 million people, it is a change which is overdue. I should say at this point that it is recognised that there are many brokers and lenders out there, and many that I personally know—I have some of their businesses in my electorate—who already operate that way and meet the highest requirements. They are very ethical, they follow codes of practice set within their industries and they also have a view that the person they are lending to is not just a consumer of credit but a customer who they should seek to look after. That is important to note. This is not about beating up on those credit providers and brokers; this is to ensure there is a form of national recognition and a form of national consistency in how we go about regulating the activities of credit providers and credit brokers.

These bills also make it easier and less costly for consumers to follow various remedies where there have been inappropriate practices or irresponsible lending. The reform package includes several key components which I will now summarise. The credit bill will establish for the first time a comprehensive licensing system in this country that will apply a regime across all areas of credit providers—lenders; the providers of consumer credit broking services. For the first time, they will have to be licensed. They will have to take out what will be known as an Australian credit licence. This will be a robust licensing requirement; it certainly will provide enhanced, comprehensive and consistent protections to consumers in all elements of the consumer credit transaction. Because it is a licensing arrangement, where a licence will be taken out and renewed, it will have the ongoing effect of ensuring continual improvement and enhancement of standards that apply within the industry. Therefore, the consumer market can have some confidence not only that those who are obtaining Australian credit licences will be obliged for the sake of their ongoing licence applications to uphold a code of conduct but also that there will be a consistently applied legal regime setting out how they go about their business in either providing credit or broking as credit providers.

This arrangement will pretty quickly sort out those fringe players in the industry. I think we have all seen a number of examples of them. I would seriously doubt whether there would be one member in the chamber who has not had people visit or call their office concerned about the standard of contract that they have entered into. The fact is there are predatory players out there and their business is simply to provide credit and collect the fees. That does occur. We know of many examples where people have been provided with credit with little or no capacity to repay. That is not the problem of the person providing the credit, because they actually get their fee. They have signed these people to contracts but what they have done is tie families to impossible financial commitments, and not only does that create stress but also these inappropriate lending procedures impact on individual people and certainly on the local economy.

In order to gain a licence the person will need to be able to demonstrate that they are a fit and proper person to hold a licence. There will be other provisions attached to the licence, because it could be a broking service and there could be other people involved. There will be very stringent licensing requirements for the proper training of staff who will be engaged in the providing of credit or the supervising of the providing of credit. There will also be stringent requirements for organisations to supervise the agents or franchises that they might have under these arrangements. It should be noted that ASIC will publish guidelines for the industry, and they will actually demonstrate what people need to do to secure their licences. This will be of considerable benefit to those many small businesses out there involved in the industry, doing the right thing and ensuring that they meet the appropriate codes of conduct at the moment. They do not want to be bound by endless red tape, and this is a way of cutting through that and simplifying it as much as possible. The new credit laws in Australia will require lenders and advisers involved in these credit regimes to actually comply with these requirements.

This measure is an important and welcomed development. It certainly will be welcomed in Werriwa, being an outer metropolitan seat in the mortgage belt of Sydney. Next weekend, on Saturday night, I am attending a function for Lifeline. As you will be aware, Lifeline has a range of services, including counselling people in respect of suicide, and another arm of Lifeline at the moment is providing financial counselling services. The function on Saturday night is actually in honour of all those many volunteers that spend an inordinate amount of time looking after the interests of others in our community. To Mr Peter Mihajlovic, the CEO of Lifeline Macarthur, and all his volunteers, I wish them well and look forward to seeing them on Saturday night. On behalf of a very grateful community, I would like to thank him and all his team for what they do in looking after the interests of people in our community, particularly when it comes to issues such as counselling in relation to either suicide or depression, or in many instances now in respect of financial matters.

It is important to understand that because this is the development of a new federal procedure there will be some issues involved in moving away from a state system to a federal system. That is why specific transitional arrangements have been made for a turning-off procedure for current credit laws as they apply through some states and territories. As a consequence, certain procedures will ensure that there can be delayed action for the obligations flowing under the credit licences up until January 2011.

I will be very brief now. I also indicate that the provisions of these laws will make it significantly easier for customers of credit providers to ensure that their contracts are sound and fair. Remedies are available to them which will make it easier for them to ensure that their positions can be put through either the Federal Magistrates Court or state magistrates courts without the need for legal representation. By accessing the code underpinned by this, this arrangement is another way of making it easier for the obligations of credit providers to be realised and to ensure that those consumers who have credit are the beneficiaries of this legislation. I commend the bills to the House.