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FinCap calls for robust credit law to protect borrowers

Today, FinCap joins eight other community organisations to publish a joint statement signalling our desire to engage with the Government to protect vulnerable borrowers.

The Government has committed to ‘Rewrite the Credit Contracts and Consumer Finance Act 2003 to protect vulnerable consumers without unnecessarily limiting access to credit.’ Andrew Bayly, Minister for Commerce and Consumer Affairs, confirmed in January that he intends to remove some affordability requirements for some lending.

This followed the Commerce Commission recently announcing its most significant enforcement action in the car lending sector. The Commission acknowledged much of the action is a direct result of financial mentors having raised concerns about the harm caused by this lending.

Ruth Smithers, FinCap Chief Executive, says:

“Andrew Bayly has signalled plans to rewind some regulation around affordable lending. This carries the risk of more borrowers becoming financially stressed and placing more demand on already strained financial mentors.

“Difficulty with out-of-control debt is a reality for everyday people in our communities, especially as the cost-of-living crisis continues to hit hard.

“Financial mentors support financially stressed borrowers with unmanageable loans from a range of income groups and life circumstances.

“We caution against quick changes to protections in the credit law without thoroughly evidenced issues and solutions. The flow on could be significant financial consequences for many borrowers.

“Lenders must continue to be required to check they are not hitting people’s basic food budget and pushing borrowers into, or further into, poverty.

“FinCap welcomes the Government’s commitment to protect vulnerable borrowers. Financial mentors appreciate Mr Bayly seeking their real world insight.”

 

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