We have found another example of power pushing out those who are trying to control the banks, and the playbook is PRECISELY the same as the Aussie Post Affair.
I discuss this with Robbie Barwick from the Citizens Party, in the context of the planned removal of Responsible Lending protections and a response to try to remove this risk. You will not believe this…
The appalling proposed changes to Responsible Lending got stalled in the Senate last week. But the Government is going to try and convince the cross-benches they should be passed for the sake of the SME sector.
However, this is absolute misdirection, as SME lending (globally as well as locally) are impacted by a range of broader factors, including the risk-weights, which explain the reason for credit rationing. It has nothing to with Responsible lending, it is just a convenient excuse to try and push the opposition over the line. Just remember the Hayne Royal Commission clearly recommended keeping the current consumer protections. And also, SME lending is in any case not subject to Responsible Lending provisions. This is a dog-whistle by a desperate Politicians keen to serve their Banking masters.
The appalling proposed changes to Responsible Lending got stalled in the Senate last week. But the Government is going to try and convince the cross-benches they should be passed for the sake of the SME sector.
However, this is absolute misdirection, as SME lending (globally as well as locally) are impacted by a range of broader factors, including the risk-weights, which explain the reason for credit rationing. It has nothing to with Responsible lending, it is just a convenient excuse to try and push the opposition over the line. Just remember the Hayne Royal Commission clearly recommended keeping the current consumer protections. And also, SME lending is in any case not subject to Responsible Lending provisions. This is a dog-whistle by a desperate Politicians keen to serve their Banking masters.
Go to the Walk The World Universe at https://walktheworld.com.au/
My final plea to the Senate to oppose the proposed changes to Responsible Lending rules when its debated tomorrow. We do not need more irresponsible lending, and we need people to champion the interests of ordinary Australians, not just the banking sector.
Apart for significant misinformation and spin about the proposed changes, Commissioner Hayne in the Royal Commission into Financial Services was crystal clear: My conclusions about issues relating to the NCCP Act can be summed up as ‘apply the law as it stands’
The dissenting report from the Senate by Senator Nick McKim Australian Greens Senator for Tasmania makes all the right points:
What this bill boils down to is that people will be left to fend for themselves. As is befitting of this government’s ideology, this bill will shift the burden of responsibility from the bank to the consumer. The vast majority of borrowers will not be provided with the most basic of consumer protection, which is that the product being sold to them is fit for purpose.
This gets to a fundamental question about how markets are regulated and what protections should be provided to consumers. Commissioner Hayne explored this issue at length and highlighted it in the second of four key observations that he made about the misconduct that he uncovered in the Introduction to his Final Report:
…entities and individuals acted in the ways they did because they could. Entities set the terms on which they would deal, consumers often had little detailed knowledge or understanding of the transaction and consumers had next to no power to negotiate the terms. At most, a consumer could choose from an array of products offered by an entity, or by that entity and others, and the consumer was often not able to make a well‑informed choice between them. There was a marked imbalance of power and knowledge between those providing the product or service and those acquiring it.
This is why consumer regulation exists. Because the dream of the efficient-market hypothesis, where well-informed individuals act rationally, seeking out the best deal for themselves, and, in doing so, this bill is designed to let the banks get on with writing loans as big as they possibly can, whether it’s good for people or not, so that they can pay even bigger bonuses and rack up even bigger profits. In a country that already has one of the highest levels of consumer debt per capita in the world, this bill would give the banks a license to entice people into even more debt. Rather than building productive capacity and ensuring individual security, this would further constrain household spending, further constrain innovation, and further lead Australia down the dead end path that is an economy built on ever increasing house prices at the expense of just about everything else.
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Labor, Cross-benches: Stop This Lending Disaster! [Podcast]
My final plea to the Senate to oppose the proposed changes to Responsible Lending rules when its debated tomorrow. We do not need more irresponsible lending, and we need people to champion the interests of ordinary Australians, not just the banking sector.
Apart for significant misinformation and spin about the proposed changes, Commissioner Hayne in the Royal Commission into Financial Services was crystal clear: My conclusions about issues relating to the NCCP Act can be summed up as ‘apply the law as it stands’
The dissenting report from the Senate by Senator Nick McKim Australian Greens Senator for Tasmania makes all the right points:
What this bill boils down to is that people will be left to fend for themselves. As is befitting of this government’s ideology, this bill will shift the burden of responsibility from the bank to the consumer. The vast majority of borrowers will not be provided with the most basic of consumer protection, which is that the product being sold to them is fit for purpose.
This gets to a fundamental question about how markets are regulated and what protections should be provided to consumers. Commissioner Hayne explored this issue at length and highlighted it in the second of four key observations that he made about the misconduct that he uncovered in the Introduction to his Final Report:
…entities and individuals acted in the ways they did because they could. Entities set the terms on which they would deal, consumers often had little detailed knowledge or understanding of the transaction and consumers had next to no power to negotiate the terms. At most, a consumer could choose from an array of products offered by an entity, or by that entity and others, and the consumer was often not able to make a well‑informed choice between them. There was a marked imbalance of power and knowledge between those providing the product or service and those acquiring it.
This is why consumer regulation exists. Because the dream of the efficient-market hypothesis, where well-informed individuals act rationally, seeking out the best deal for themselves, and, in doing so, this bill is designed to let the banks get on with writing loans as big as they possibly can, whether it’s good for people or not, so that they can pay even bigger bonuses and rack up even bigger profits. In a country that already has one of the highest levels of consumer debt per capita in the world, this bill would give the banks a license to entice people into even more debt. Rather than building productive capacity and ensuring individual security, this would further constrain household spending, further constrain innovation, and further lead Australia down the dead end path that is an economy built on ever increasing house prices at the expense of just about everything else.
Go to the Walk The World Universe at https://walktheworld.com.au/
We discuss the current Senate inquiry into the proposed changes to responsible lending regulation. Submissions will close on the 3rd February, so its not too late to make a submission, to protect the rights of consumers.
The government has announced a relaxing of responsible lending obligations as they pertain to business lending, in order to ensure small businesses can access credit quickly and efficiently in the coming months. Via Australian Broker.
As it stands, responsible lending
obligations don’t apply to lending predominantly for business purposes;
however, in order for a loan to fall within this exclusion, a lender is
required to undertake due diligence to confirm the money borrowed meets
this test.
Now, the government is changing this through providing an exemption from responsible lending obligations for a period of six months, in relation to the credit lenders extend to their existing small business customers so long as:
There is an existing borrowing relationship
Some proportion of that credit is used for business purposes
The exemption will apply to new credit, credit limit increases and credit variations and restructures.
The government recognised the “environment
for small business has changed and continues to evolve with the
rapidly-evolving challenges posed by the coronavirus”.
The revision is intended to enable lenders
to move quickly to support small businesses, at a time when prompt
action has become more crucial than ever.
Credit providers regulated by APRA will
remain subject to APRA’s prudential standards while the exemption
applies, and providers who subscribe to an industry code will remain
obliged to abide by that code.
The Morrison Government has promised it
will continue to work with the banking industry and the financial
regulators to support Australian jobs and businesses moving ahead.
