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Transcript interview with Ticky Fullerton: Lateline business, AbC News 24: 18 October 2010: National Consumer Credit Protection Act.



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Transcript of 18/10/2010 NO.003

INTERVIEW WITH TICKY FULLERTON

LATELINE BUSINESS, ABC NEWS 24

18 OCTOBER 2010

SUBJECTS: The National Consumer Credit Protection Act

TICKY FULLERTON:

Well to respond to some of the issues raised in Andrew's report, I spoke to Bill Shorten, assistant Treasurer and the Minister for Financial Services.

[Excerpt]

TICKY FULLERTON:

Bill Shorten, welcome to Lateline Business.

BILL SHORTEN:

Thank you Ticky.

TICKY FULLERTON:

Now we've got regulation of credit to a national framework now but there are some clear gaps emerging. I guess one of the most obvious is the - is with phone companies and the iPhone bonanza for young players. Why is - why are telcos not included in the legislation?

BILL SHORTEN:

Well I think it's important to establish what we've said we're going to do by the middle of next year.

One is we've said that we want to make sure that credit card over limit fees can't be charged without people's consent. We're also putting in a range of other protections around reverse mortgages. We've issued a green paper as part of that process so we want to see the consultation occur, consultations happen today in Sydney for instance.

And it will also uncover some other issues and the issue you're referring to is something which we see as part of the reforms going forward. Now there is a big difference for utilities charging certain amounts of money than perhaps some of the other credit regulations we're currently looking at in the Credit Act, specifi...

TICKY FULLERTON:

[Interrupts] But are they - are they really that different though? Because these are effectively long term contracts and particularly young people getting in and perhaps being not aware at all of what they're actually getting themselves in for.

BILL SHORTEN:

I'm sorry if I wasn't clear. We don't want to see consumers ripped off. That's why we've instigated the changes we have. You're highlighting another valid issue which does have certain common features I think with the reforms we've already got under way.

One point I need to make though about that is that where utilities are not charging large amounts of debt upfront with an interest rate, it isn't immediately the preserve of the Credit Act. Having said

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that, it's still an issue which you've identified. We are - we believe that there's a role for the Telecommunications Industry Ombudsman to take up some of these matters.

In addition we are going to monitor and see what people tell us during the course of this consultation. So I don't think what I've said is fixed in stone but we see alternative mechanisms available to help young people who are getting into the traps that you do correctly identify.

TICKY FULLERTON:

It's the loopholes that you're going to have to be quite specific about isn't it? I mean another example that we hear about is Radio Rentals using the idea of replacing a TV or whatever and using the word replacing it with something similar for a dollar. Now by using that word you automatically are not dealing with a contract, you're dealing with a lease. So you're not again caught by the legislation.

BILL SHORTEN:

Our main concern is to make sure the consumers don't get ripped off and because of that concern, that's why we're putting in our first phase reforms and we're starting in our second phase now of the consultation. The issue of people using so-called rental agreements to avoid the protections of the Credit Act to be able to rip people off, to put not too fine a point on it, is a live issue.

One of the tests which we're looking up and weighing up is where the value of the arrangement is less than the product which is actually being - than the rental scheme would pay, well I think that does deserve attention.

For instance if you just rent a car for a - you know for a couple of days, that's a rental arrangement, pretty unequivocally. If you have a TV plan which goes - where the rental payments are never ending or they add up to well in excess of the value of the television then I think that we are attracting the sort of issues which the Credit Act and our reforms are squarely aimed at.

TICKY FULLERTON:

Another area of concern for consumer action groups is this payday lending, automatic debiting on payday.

BILL SHORTEN:

Mmm.

TICKY FULLERTON:

Now the legislation is talking about substantial hardship there, but it's hard to see that that's going to cover small loans and it's hard to see that individuals are really going to complain which is what needs to happen at the moment.

BILL SHORTEN:

There's no doubt in my mind that the payday lending market has exploded in recent years in terms of the scale of it and the number of people involved in it and the facts back that up. We certainly don't want to see people being prayed upon because they have a very urgent need for a few hundred dollars and then exploit it.

The challenge for us is, is it possible to have a national interest rate on payday loans? We're certainly looking in our consultations with a green paper to look at issues that people are raising now. We hope to make a landing on the issue of whether or not it's going to be possible to regulate some of those issues of loans to small business and also payday loans, hopefully by the middle of the year after next.

And this is a very detailed area of consultation which we do need to respect all the points of views but I think this government's definitely committed to consumer protection.

TICKY FULLERTON:

Minister just a final one of private equity. We see KKR making a tilt for Perpetual today. What is happening with moves to regulate the private equity industry because Mark Carnegie, a player only last week, came out and said that the fees were you know, exorbitant. Is anything happening from the Government's side?

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BILL SHORTEN:

Well the Tax Office has issued some draft determinations about private equity and I'm sure that in the reasonably near future we'll issue a final determination to provide certainty with - certainty - further certainty for the private equity industry.

I mean let's be clear, private equity is an important part of the capital base of Australia. By the same token we also want to make sure that we are - protect the integrity of the tax revenue system of Australia.

TICKY FULLERTON:

But the ball's in the Tax Office's court, not yours?

BILL SHORTEN:

Well the Tax Office is the people who issue the determination, not ministers in the Government and we'll obviously know what they say when they do it. I know that they're focused on this issue.

The Government's just been elected. There's a whole - there are a range of issues which I'm certainly turning my attention to as the minister responsible for the Tax Office and I know that the Tax Office are professional and they are working very hard on providing certainty for the private equity field.

TICKY FULLERTON:

Bill Shorten, I thank you very much for joining Lateline Business.

BILL SHORTEN:

Thanks Ticky.

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