Interim Report

There is a lot of talk about the report but by and large the results are known ... assume the brokers would be all over this.

Link to full interim report ...

http://consumercredit.treasury.gov.au/content/downloads/Review-of-SACC-laws/Interim-Report-SACC.pdf



Observation 1 One of the key outcomes of regulation in the financial sector should be the facilitation of consumers onto a path of financial inclusion rather than exclusion.
Observation 2 The responsible lending obligations do not appear sufficient to prevent financial harm to consumers who use SACCs. Additional consumer protection specific to SACCs seems to be required. ASIC enforcement of the responsible lending practices of SACC providers should be a priority.
Observation 3 High levels of repeat borrowing appear to be causing consumers financial harm. The structure of the SACC cap and industry costs appears to promote repeat borrowing and the rebuttable presumptions do not appear to have limited repeat borrowing.
Option 1 Reduce the establishment fee for subsequent loans for a returning customer from 20 per cent to 10 per cent.
Option 2 Replace the rebuttable presumption that a SACC is unsuitable if a consumer has had two or more SACCs in 90 days, with a bright line test banning the provision of SACCs to consumers who have had two or more SACCs in the past 90 days.
Option 3 Extend the protected earnings amount for Centrelink recipients, where total SACC repayments cannot exceed 20 per cent of gross income, to all consumers and lower the protected earnings amount to no more than 10 per cent of net income.
Observation 4 The limit on the amount that a SACC provider can recover in the event of default is an important safeguard for consumers. However, in some circumstances, the fees charged on default appear to be charged in a manner that significantly disadvantages vulnerable consumers.
Option 4 Introduce a default window, where no default fees can be charged until the consumer has missed a payment by one payment cycle
Option 5 Maintain the current maximum amount recoverable for default of a SACC but introduce a supplementary cap to limit how quickly fees can be charged (for example, $10 per week).
Option 6 Cap default fees as a percentage of the amount outstanding on the SACC.
Observation 5 Some SACC providers do not appear to be giving consumers any benefit or discount when they make early repayments or pay back the loan in full before the due date. These practices may result from the SACC cap being based on a fee, rather than an interest rate.
Option 7 Provide SACC consumers with a benefit for early repayment by specifying the reduction in payment that would arise from early repayment of a SACC (whether in full or in part).
Option 8 Require SACCs to have equal repayments over the life of the loan, while still allowing consumers the ability to pay off a SACC early.
Observation 6 The high cost of consumer leases appears to be causing consumers financial harm. While there are technical differences between credit contracts and consumer leases, these differences do not appear to justify consumer leases being excluded from the consumer protection regulations that apply to other forms of finance under the Credit Act.
Option 9 Introduce a cap on the maximum amount a lessor can charge. The cap would apply to a defined class of leases covering low-value goods.
Observation 7 During consultation, stakeholders noted that a large proportion of the cost of consumer leases can be attributed to add on products. There is little transparency regarding the nature or cost of these services and the value that they provide to consumers. It may not be clear to consumers that these features are available when they enter into a lease or that they extend beyond the statutory guarantee under the Australian Consumer Law.
Option 10 Include the cost of add on features and products under the cap
Observation 8 If a cap were to be introduced on a restricted category of consumer lease, it should be designed in a way that limits the risk of avoidance. Although extending a cap to all leases and broadening the scope of the Credit Act to include indefinite term leases are matters outside the terms of reference of the review, government may wish to consider the implications for those leases outside the scope of this review.
Option 11 Cap the amount of net income that can be used to service all lease repayments.
Option 12 Prescribe the maximum amount that can be charged on early termination of the contract.
Option 13 Provide a remedy for consumers similar to that in section 78 of the National Credit Code allowing action to be taken for an unconscionable termination charge.