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     7   Payday lending and consumer leases

Ms Parke, pursuant to notice, moved—That this House:

(1)        notes that:

(a)        there is considerable evidence that payday lending and consumer leases are not properly regulated and that both financial practices are causing serious harm to low income Australians;

(b)        irresponsible and immoral lending is endemic in the payday lending industry, which is growing rapidly and developing new online opportunities to encourage people to borrow with insufficient consideration of their capacity to bear the exorbitant and poorly regulated interest costs that payday lending involves;

(c)        the Australian Securities and Investment Commission review of payday lending found that 24 per cent of loans were taken out by Centrelink customers and 54 per cent were taken out by customers who had two or more payday loans in the previous 90 days, a clear indication that they are caught in a cycle of repeat borrowing;

(d)        consumer leases can involve an effective annualised interest rate of 240 per cent, and generally mean that vulnerable consumers pay three or four times the value of basic household items like refrigerators or washing machines;

(e)        consumer leases operate with lower consumer protection standards under the National Credit Code, though such agreements are not materially different in effect from credit contracts;

(f)         in 2013-14 nearly half of Radio Rentals’ $197 million revenue was received through the Centrepay system which allows payments to be directly debited from a consumer’s Centrelink account; and

(g)        Senator Cameron has brought a private Senators’ bill that seeks to remove consumer leases from access to the Centrepay system; and

(2)        calls on the Government to:

(a)        ensure that the recently announced review into the 2013 reforms to payday lending focuses on securing the wellbeing and protection of low income Australians irrespective of the effect this has on the profits of companies that practice this kind of often predatory lending;

(b)        act quickly to stop consumer leases being used to prey on vulnerable and low income Australian households by ensuring that consumer leases are subject to the same standards and controls as credit contracts, and by introducing stricter controls on the currently outrageous and indefensible costs involved in such arrangements, including the requirement to prominently disclose the total cost of all contracts; and

(c)        support Senator Cameron’s initiative in removing access to Centrepay for consumer lease companies and amend section 123TC of the Social Security (Administration) Act 1999 to include a definition of consumer leases for this purpose.

Debate ensued.

The time allotted for private Members’ business having expired, the debate was interrupted, and the resumption of the debate made an order of the day for the next sitting.