Bracing for a blow to our battlers
Stripping away responsible lending laws risk a longer recession, says Chris Jones
IF your house is on fire, you call the fire brigade for help. But if the firefighters have nothing to work with — no water, no hoses, no pressure — there won’t be a lot they can do to put out the flames.
For financial counsellors, responsible lending laws are critical for helping to save people from financial disaster. They are like the firefighter’s water.
Since 2009, Australia has had laws to protect people from exploitative lending by banks and other lenders. However, the federal government has released a draft Bill that would see these protections axed from March.
Anglicare Tasmania is part of a campaign by financial counsellors urging the federal parliament not to pass the changes. In particular, Tasmanian senators will have the opportunity to use their influence for good.
Responsible lending laws provide critical protections to deter lenders from providing unaffordable and unsuitable loans, and offer redress for people when laws are breached. Axing these will hurt individuals and families. Remember the Banking Royal Commission and the heartbreaking stories of people harmed by irresponsible lending? The Royal Commission recommended these laws be more strongly enforced, not rolled back.
Not only do these laws help to protect people, our financial counsellors use them to find a way forward for people who were still loaned money they are unable to repay. For example, our counsellors have provided support to an elderly Tasmanian with a serious mental illness who, confused and frightened by a scammer’s demands, was given a large personal loan and significantly increased limit on a credit card. An appropriate assessment by the lender would have shown she did not have the capacity to repay these debts.
Our team has negotiated a repayment plan and reduction in debt for a person who accessed multiple credit cards and three personal loans while already swimming in debt.
Without the current legal protections, it is likely we will see more people pressured to sign up for high interest credit cards, car loans and mortgages they can’t repay. The changes risk extending the COVID recession, damaging the economy and the quality of life for millions of people.
If you’re a federal politician, you’ll be hearing from Anglicare Tasmania. We stand alongside Financial Counselling Australia, Choice, Consumer Action Law Centre and Financial Legal Rights Centre in speaking up. There are about 950 financial counsellors across the country who know exactly what axing of these protections would mean. Anglicare Tasmania is one of many organisations gearing up for a rise in demand for financial counselling because of decisions to reduce then end JobKeeper payments. Loan deferrals and rent moratoriums are finishing. If parliament takes away these lending protections, it will expose people to an increased risk of harm and make the job of our counsellors even more difficult. Don’t let us face a raging fire without any water.
Listen to the warnings of Australia’s financial counsellors, people motivated by compassion and fairness, not greed. Unaffordable debt impacts physical and mental health, family wellbeing and the ability to pay for essentials like education and health.
Every day, our financial counsellors listen to people feeling overwhelmed. Some are suicidal. Some are considering bankruptcy, while others are on the verge of homelessness. This proposal would only increase the number of people who need help. What’s most frustrating is that it is avoidable.
Don’t take away these vital legal protections. In the midst of a recession, people need them more than ever. Financial counsellors provide free, independent and nonjudgmental assistance. Call the National Debt Helpline on 1800 007 007. Find out more at www. ndh. org. au