Page 2827 - Week 10 - Tuesday, 13 September 1994
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throughout Australia. It is a complex, time consuming and costly process for financial institutions to keep up with the law in eight jurisdictions. The cost, of course, is borne by the consumer because the banks and the financial institutions who have to make sure that all their contracts comply with different regimes in different States and Territories have to employ a bevy of lawyers. The consumer pays for that.
It is not uncommon for minor technical errors to occur, and the consumer, at the end of the day, pays for that. Even when there is a penalty imposed at the end of the day, the penalty gets borne out of corporate profits; so, the consumer pays. It is certainly my hope that the enactment of the uniform consumer credit package will lead to a more competitive market and, indeed, a better deal for consumers. It has taken far too long. I have attended consumer affairs Ministers meetings since we came back to office in 1991. At every meeting we have issued press releases saying that we have finally achieved uniformity, and then there has been backsliding and changes of position and it is all back to the drawing board.
I am very pleased that at last the legislation is in place. It is not legislation that is as strong or as pro-consumer as the Chief Minister or I would have liked; but, unfortunately, the shifting sands of Australian politics over the last few years have seen changes at ministerial council level and, hence, changes in position. Indeed, it was at the point that the ACT and Queensland governments were having some serious questions about whether we would stay part of the package, whether it was pro-consumer enough; but we eventually took the view, after consulting with the Australian Consumers Association and others, that uniformity was worth it and that, although it is not as strong as we would have liked, there is benefit to consumers.
There are a couple of specific points that Mr Humphries raised that I do need to address before doing a significant mea culpa. The Canberra Times is present. I thought they were not; but they are, so they will get it all. The trust fund is a significant benefit. There are many cases where a financial institution makes an error, is in breach of the Act, but the extent of penalty that would apply to an individual borrower would be $5 or $10 and it is hardly worth the consumer's while to get a tiny cheque. The administrative costs that it would place on the financial institution to track down every consumer who is owed $5 and make sure that the cheque is drawn, processed, posted and gets to the consumer could in many cases be more than a $5 cheque.
We set up a provision that where an error is found and a penalty is applied - that is, say, $5 per consumer - the financial institution can apply to the tribunal for an order that, instead of making those thousands of individual payments, potentially hundreds of thousands of individual payments, the money go in a single lump sum to this trust fund. That is obviously in the interest of the financial institution, in the sense that they pay their penalty but they avoid the massive administrative costs, and is potentially of great benefit to the community, because, instead of a few dollars going to a lot of people that would mean nothing, we start to build up a kitty that can be used for very worthwhile projects.
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