More than 31,000 Australians have made complaints about banks since the Banking Royal Commission concluded on February 1 2019.
Data from the Australian Financial Complaints Authority (AFCA) shows that 31,000 Australians lodged formal complaints about consumer loans, credit cards and housing finance from November 2018 to December 2020.
It comes as the federal government decides on a proposal to roll back consumer protections.
The reforms are meant to make borrowing easier as the economy recovers from COVID-19, but consumer group CHOICE is warning it will have the opposite effect on everyday Australians.
The legislation is still in its draft phase.
Alan Kirkland, CEO of CHOICE, says the consumer group has analysed the 31,000 complaints and said now is the time to tighten, not loosen, lending laws.
“The banks promise they’d clean up their act after the shame of the Royal Commission hearings but over 31,000 credit complaints show there are still huge problems in the system,” he said.
CHOICE analysed the complaints and found the issues ranged from irresponsible lending and charging of incorrect fees to poor customer service, fraud, and unfair terms and conditions.
Complaints come from across the country, from Werribee in Victoria to Parramatta in NSW and even Sydney’s harbour suburbs.
Terrigal and surrounding suburbs on the Central Coast of NSW had the most complaints, with more than 1000 grievances against credit products at banks.
“Repealing safe lending laws is an extraordinary thing to do when many Australians are struggling in the wake of COVID-19,” Kirkland added.
“If passed, this will be the biggest handout to the banks we’ve seen in decades.
“This is a time for the Senate to do what it was created to do – temper the influence of lobbyists and make sure Australians are put first,” Kirkland added.
“This contradicts the very first recommendation of the Banking Royal Commission – to leave safe lending laws intact.”
Proposed changes to the National Consumer Credit Protection Act 2009
Josh Frydenberg sent out a release in September 2020 with the following information:
The Government will simplify the system by moving away from a “one-size-fits-all” approach while at the same time strengthening consumer protections for those that need it.
Key elements of the reforms include:
- Removing responsible lending obligations from the National Consumer Credit Protection Act 2009, with the exception of small amount credit contracts (SACCs) and consumer leases where heightened obligations will be introduced.
- Ensuring that authorised deposit-taking institutions (ADIs) will continue to comply with APRA’s lending standards requiring sound credit assessment and approval criteria.
- Adopting key elements of APRA’s ADI lending standards and applying them to non-ADIs.
- Protecting consumers from the predatory practices of debt management firms by requiring them to hold an Australian Credit Licence when they are paid to represent consumers in disputes with financial institutions.
- Allowing lenders to rely on the information provided by borrowers, replacing the current practice of ‘lender beware’ with a ‘borrower responsibility’ principle.
- Removing the ambiguity regarding the application of consumer lending laws to small business lending.
A vote on the new laws is expected this week.