Saturday, 8 January 2022

Finance Committee should review changes to Credit Contracts and Consumer Finance Act


ACT Leader David Seymour has written to the Finance and Expenditure Committee, asking it to open an inquiry into the effects of recent changes to the Credit Contracts and Consumer Finance Act.

“Over the past month I have heard about the new law from people in banking, mortgage broking, and people trying to get credit. They’ve been frustrated with needless red tape since it came into effect on December 1,” says Mr Seymour.

“In one reported case, a man who applied to have his credit limit increased by $500 was confronted with fifteen pages of forms, despite never having missed a payment in the seven years he’d had the card. It’s also reported that there may be an artificial credit crunch as the law slows down lending across the board.

“The Finance and Expenditure Committee examined the Credit Contracts Legislation Amendment Bill in 2019. Now that law is creating widespread headaches for people trying to get credit from their banks, and the Committee should be asking why.

I have written to the Committee, and its chair Dr Duncan Webb, asking that the Committee use its powers to initiate a review or at very least seek a briefing into the havoc this law is causing. What is the point of the Committee having such power if it won’t use its powers to hear the public’s concerns about the laws it’s been involved in making?

“I was a member of the Finance and Expenditure Committee when this law was passed. There was intense debate about the interest rates, auxiliary fees, and terms of small high cost loans for vulnerable lenders. Everyone believed we were dealing with predatory lenders, such as those with lending trucks referred to in the Bill.

“Nobody believed that the law would affect every single person seeking credit, whether they were vulnerable or not, but that’s exactly what’s happened.

“I hope that the Committee will hold an inquiry into the operation of the law so that the people affected can have their say. If it agrees with their concerns, it should make recommendations to the Minister to fix the law as soon as possible.”

A copy of the letter to the Finance and Expenditure Committee can be found here.