Plans by the House of Representatives Economics Committee to stamp out predatory lending practices have gained support from consumer groups and financial industry bodies.
Industry body for credit unions and mutual building societies, Abacus Australian Mutuals has welcomed proposals made by the committee to reform credit regulation in the lending industry.
Head of public affairs at Abacus Louise Petschler said that while credit unions and mutual building societies are responsible lenders, there needs to be greater regulatory control over the real offenders.
“As Australian Prudential RegulationAuthority regulated approved deposit-taking institutions (ADIs), we welcome the committee’s recognition that ADIs are not involved in inappropriate lending practices,” she said.
“Abacus believes that the current regulatory framework does not adequately meet the aim of discouraging predatory lending in the market.”
The House Standing Committee on Economics, Finance and Public Administration has put forward recommendations for improved data collection on home repossessions, Commonwealth regulation of credit and increased monetary limits for existing dispute resolution schemes.
The committee stated that “first and foremost, credit regulation should protect borrowers from predatory lending practices”.
According to Petschler, if the reforms are to succeed they need to take a targeted approach in rooting out the bad apples, and feels that to date the reform options proposed by the state governments have been too broad.
“Response to aggressive or predatory lending should target the offenders in the market, and not add further costs to responsible lenders,” Petschler said.
“The committee’s call for non-ADI lenders and brokers to be subject to greater regulatory oversight and dispute resolution scheme is strongly supported by the mutual banking sector.”
