Credit (Transitional Arrangements) Bill

25 May 2010 archivespeech

This speech is to indicate the Liberal Party's support for the Credit (Transitional Arrangements) Bill.

The Hon. J.M.A. LENSINK (17:40): I rise to indicate Liberal support for these bills, which represent phase 1 of further nationalisation of consumer credit laws as recommended by the Productivity Commission in May 2008 and Treasury in June 2008. The rationale for nationalisation beyond merely harmonising laws is that, in the interests of consumer protection and enforcement, it is easier for one national law to keep pace with new products, particularly with the resources of the Australian Securities and Investment Commission (ASIC) to enforce them.

COAG agreed to a package of reforms in July 2008 and an intergovernmental agreement between the commonwealth, states and territories, the National Credit Law Agreement 2009, has been signed off. I note that the commonwealth parliament passed the National Consumer Credit Protection Act 2009 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, and the effect of the bills before us in this parliament is to refer South Australia's credit laws to those commonwealth acts.

By way of background, I point out that the states and territories agreed to nationally uniform consumer credit laws in 1993 through the Uniform Consumer Credit Code, which in South Australia was enacted through the Consumer Credit (South Australia) Act 1995. This act refers our state's consumer credit powers to the Consumer Credit (Queensland) Act 1994, which is to be repealed. The new bills will replace this referral in favour of the commonwealth National Consumer Credit Protection Act and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act. The existing regulatory role of OCBA and other state and territory based fair trade offices will transfer to ASIC, which already has a significant role in consumer credit regulation.

The national agreement between commonwealth, states and territories requires the commonwealth to consult prior to amending those acts as referred to. Since the signing of the agreement the parties have also agreed on exemptions, or what is being called 'carve outs', from the amendment reference, and these stipulate that the commonwealth cannot override state legislative authority in respect of state taxes, the recording of a state's interest in land, the priority of interests in real property and state laws regarding statutory rights.

It was originally expected that phase 1 of these reforms would be completed by mid-2009; however, delays have occurred. In some of the publications that were provided by the commonwealth, such as the National Consumer Credit Protection Bill 2009, the dates are not up to date because of those delays. I understand that phase 2 will include matters such as fringe lending, interest rate caps and small business credit.

In relation to the two specific acts, and I state that I am speaking to both of these cognate bills simultaneously, the Credit (Transitional Arrangements) Bill sets out definitions and powers which refer to the national legislation and codes, etc., and provides for linkages between the Commissioner for Consumer Affairs and ASIC, and repeals redundant references to consumer credit provisions within our South Australian statutes. The Credit (Commonwealth Powers) Bill adopts the national credit legislation and includes the exclusions, as I have referred to.

The new commonwealth regime largely mirrors the existing regime, as set out in the Queensland act. The new provisions are that there will be national licensing of all credit providers, which will impose a fitness and propriety test in order for them to become Australian credit licence holders. It will also become mandatory for providers to be members of an external dispute resolution scheme, the rationale of which is to provide a lower cost alternative to legal remedies through the court system. There are also new responsible lending requirements, which impose that those who provide credit are to assess the suitability of their clients to repay loans.

I had some correspondence in relation to the mortgage brokering industry—and it was the subject of questions in this parliament in, I think, April last year—and it had considerable concerns with the legislation as it was to be introduced into the New South Wales parliament. I have sought the views of the Mortgage and Finance Association of Australia, and they have written to let me know that the concerns they held with this bill at that time have been dealt with through consultation. I have also had email correspondence from the National Financial Services Federation, which fully supports the bills in their current form and which asks for parliament to pass them posthaste.

I have a few questions for the committee stage, but one I will place on the record to which the minister may be able to obtain a response is in regard to claims which were made in the Sunday Mail, and which I understand relate to the bill that was passed in the federal parliament. The Sunday Mail of 25 April this year outlines a number of personal matters and privacy breaches that it claims may take place as a result of these acts coming into operation. It states:

The new National Consumer Credit Protection Act laws will apply to all forms of credit—mortgages, personal loans and credit cards. Some banks are already...insisting on more bank statements with credit applications and quizzing customers about large cash withdrawals.

The article is making the point that making large cash withdrawals, betting or being pregnant may lead to people being refused credit. It also quotes a spokesperson from Aussie Home Loans, who says: ...the increased level of prying into consumer spending was "terrible". If a broker meets a couple and the woman looks large, it is now down to the broker to ask: 'Are you pregnant or are you just fat?'

I think we would agree that, if these claims are part of what is going to be in place as of 1 July, it would be quite disturbing, so I ask the minister to provide some evidence that that is not the case. I confess that I have not read the federal legislation but, given that through consultation various organisations have expressed their support for the bill, I will be supporting it, but I will have some questions at the committee stage.