Opposition against scrapping safe lending laws

After the Government proposed scrapping safe lending laws, 125 organisations have joined in opposition to protect the rules that prevent consumers from gaining loans they are unable to repay. 

In an open letter, the group urged Senators to block proposed weakening of safe lending laws which protect consumers from aggressive lending by financial institutions. 

Supporters of the open letter include the Australian Council of Trade Unions (ACTU), the Australian Council of Social Service (ACOSS), Anglicare, and a range of religious, community, legal and family violence organisations from across Australia. 

The letter had support from national polling as 79% of people thought banks should be required to always check a customer’s ability to repay before offering a mortgage, while only 4% disagreed. 

The proposal to scrap the rule had support from the  Customer Owned Banking Association (COBA) and Master Builders Australia who argued it would allow consumers to gain credit more easily. 

Karen Cox, Financial Rights Legal Centre chief executive, said: “Responsible lending laws were designed to stop the reckless lending we witnessed throughout the Global Financial Crisis and the Royal Commission. It’s beyond belief that less than two years after the royal commission made this its first recommendation that the Government wants to go directly against it.”  

Alan Kirkland, Choice chief executive said: “We have seen what happens when banks are unregulated, with no penalties for bad behaviour. That’s why we had to have a royal commission. Nobody wants to go back to those days.  

“Vital organisations that assist millions of Australians have joined together to oppose these changes to lending laws. From community groups to domestic violence services and frontline legal assistance organisations, we know that removing these laws will hurt people.”   

Fiona Guthrie, Financial Counselling Australia chief executive, said: “We implore the Senate to listen to the warnings of financial counsellors, because our only interest is that of our client’s. We cannot in good conscience sit by and let these laws go through without doing what we can to stop them. That’s also why financial counsellors from around Australia are writing to their local politicians asking to meet.” 

Gerard Brody, Consumer Action Law Centre chief executive, said: “Under the government’s plans, borrowers would have existing rights to sue their lender for unsuitable lending removed. Lenders would also have far fewer incentives to comply with good lending standards, because penalties for breaching laws are being removed and weakened.” 

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Can any of these consumer advocacy groups please explain how it is in banks interest to lend money to people who cannot pay it back ?
It’s fundamentally not good business, so why would banks lend to people who can’t pay it back ?
And if banks did this regularly they would fail ??
Oh that’s right, consumers know nothing, consumers must be protected from themselves, from lenders, from financial advisers, etc as no one can every make a decision for themselves and no one should ever be held responsible for their decisions made.
Cotton wool, nanny state do gooders wanting to REGULATE AUSTRALIA TO DEATH !!

I think you have your first sentence saying the opposite to what the consumer groups are saying.

But you are correct about the puzzle of banks lending to people who are unable to repay. The banks did and still attempt do so. It's the share holders who pick up the tab for poor lending practices and approvals.

Who is "picking up the tab" for the Consumer Groups?

ASIC again of course
Canberra bubble bureaucratic morons full of left wing zealot loony’s. Funding paid for conflicted research and commentary.
ASIC have zero ethics, highly conflicted and no real world idea.

Sure not coming from Master Builders which wants easier credit and wants no care and responsibility.

Nope exactly what I said is what I meant.
Please get consumer groups to explain why it’s in banks interest to lend to people who can’t pay back?
Because it’s not.
Nanny state, consumer know nothing, consumers must be told how to run their own finances and if anything ever goes wrong it’s the Banks or Advosers fault every time. It can never be the consumers fault for having anything go wrong and having a financial loss.
More BS Regs, more Red tape costs.
Whaaaaa, whaaaaaa, whaaaaa !!!

Ask anyone how difficult and cumbersome it is to get a home loan these days. At the moment the whole system is designed to accommodate the lowest common denominator, and people who can't accept any personal responsibility. There will still be an assessment as to whether people can repay loans, its just people cannot blame the bank for their own poor choices.

It is carve out for the big banks so they can churn and burn through their branches without any repercussions while the 60% that go through mortgage brokers will still have similar constraints. e.g. best interest duties.

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