The National Financial Services Federation has strongly urged the Government to enter into further dialogue around its new National Consumer Credit Protection legislation amendments, arguing that key elements have been distorted by the media and consumer advocates.
As well, the Federation has accused the Assistant Treasurer, Bill Shorten, of seeking to pre-determine an outcome and of providing an inappropriately short consultation period.
In a submission filed with the Government his week, the Federation has claimed the proposed legislative amendments will have unintended consequences which could leave up to 500,000 consumers "financially excluded from credit".
The submission described the 500,000 as being a separate group of consumers who had not been recognised in the reform process to date.
"As this group of consumers is not considered vulnerable or disadvantaged, they do not qualify for one of the alternatives quoted by the Minister," it said. "At the same time, they can not access small amount short-term credit via the mainstream banking system."
The Federation claimed the Government’s legislation would effectively remove a key sector of the industry, and the void would be filled by unlicensed and unregulated operators – effectively exposing consumers to more risk.
The submission claimed the demand from the estimated 500,000 consumers would not go away, and moved on to suggest their exclusion had been the result of a process to date that had lacked clarity and had often been the subject of confusion.
It said this had "allowed the media and consumer advocates to paint a picture that is not representative of the small amount short-term finance market".
"The Federation implores Treasury and the Minister to consider further dialogue on this key issue, as we have some significant options and proposals which are worthy of serious consideration," the submission said.
