COBA backs sweeping credit reforms
The Customer Owned Banking Association welcomes the government’s move to simplify Australia’s credit framework
According to Friday’s reports in the mainstream press, the government will announce on Friday an overhaul of lending laws.
The new credit laws will be applied to mortgages, personal loans, credit cards and payday lending with the aim of freeing up access to credit.
Borrowers won’t need to provide detailed information when applying for new loans with the current laws around responsible lending – that was currently subject to argy bargy between Westpac and ASIC - expected to also be abolished.
In essence the framework will shift from 'lender's beware' to 'buyer' beware'. The central bank governor Phillip Lowe has previously acknowledged that not all bad loans were the fault of the bank.
And while the credit laws are to be reformed, it is expected that payday loans willl attract greater scrutiny.
“We look forward to seeing the detail of the government’s proposals but the objective of simplifying unnecessarily complex regulation has our strong support,” COBA CEO Michael Lawrence said.
Lawrence said the government was right to take decisive action to promote lending at a time of great uncertainty and the biggest peacetime economic contraction since the 1930s.
“There are multiple layers of regulation applying to lending so simplifying these regulations while maintaining strong consumer protection, particularly for vulnerable consumers, is very welcome.
“This environment requires policymakers and all stakeholders to bring a new lens to all regulatory settings.
“This is good news for borrowers and lenders. Applying for a loan will be a simpler process.”
He added that unnecessary and duplicative regulation hurts consumers because resources are diverted away from investment in product innovation, better service and better pricing.
“Consumers can also be subject to unnecessary delays and frustrating paperwork.
“There is also the broader deadening effect on the economy’s dynamism of too much regulation.”
According to Lawrence, customer owned banking institutions have always been responsible lenders.
“Putting our customers first is part of our DNA. We certainly don’t need prescriptive and complex laws to make sure that we lend responsibly.
“Our sector’s sound lending practices are also subject to strong prudential oversight by APRA.”