Page 1816 - Week 07 - Wednesday, 22 August 2007
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governments commented that they were already looking into the problem and planning on introducing legislation. Apparently, there was a decision in relation to this by all state and territory governments at a ministerial council meeting that took place in September last year. I would be very interested to hear in this debate from the relevant minister, who I believe to be Mr Corbell, the Attorney-General, about what was decided by the ministerial council and where the Labor government’s plan is taking us. I am concerned that the ACT government would rather wait and see what the other governments do, in contrast to taking unilateral action in the immediate future—action which other states and territories might follow.
The Greens introduced the 2002 credit card legislation because we were tired of waiting to see what would be agreed at a national level, and both sides of the Assembly backed us back then. I hope that the Labor and Liberal parties will once again agree that action must be taken in the ACT sooner rather than later. The ACT Greens and CARE recommend that, as a necessary and first precaution, the ACT government draft amendments to the ACT Fair Trading Act that are similar in principle to its section 28A—the section the Greens introduced in 2002 to counteract similar problems regarding credit cards.
There may also be an option to amend the credit code, or Consumer Credit (Administration) Act, but amendments to the Fair Trading Act appear more desirable as they would be enforced by the Office of Fair Trading and could receive a tougher penalty. Mind you, I do think the Office of Fair Trading would need more resources to be able to do that, but I believe they already need more resources, anyway.
I note the Attorney-General was quoted in yesterday’s Canberra Times as saying that, under the Consumer Credit (Administration) Act, the ACT already had laws in place ensuring that lenders have assessed a debtor’s financial situation before offering a home loan. The main section of the act seems to be 21 (a), which sets out the grounds for disciplinary action in relation to a credit provider, including “if the credit provider has provided consumer credit inefficiently, dishonestly or unfairly”. This section is quite wide and ambiguous. It is mostly concerned with the registration of credit providers. It is a reactive measure rather than a precautionary or preventive one. It relies on low-income consumers, who are often financially and legally illiterate, as ASIC pointed out in its submission to the Productivity Commission inquiry, engaging a legal expert and taking to court a business that has many more resources at its disposal than they do.
If the ACT government contends that the Consumer Credit (Administration) Act provides enough protection, why isn’t it providing that protection? It simply does not appear to be working. Why are no doc and low doc loans still accessible in the ACT? Why is the number of people facing home repossession from these subprime lenders rising so dramatically? Clearly, the legislation is not working.
I do not think that if this parliament did decide to enact such legislation in the future it would require the home loan sector to implement totally new practices. I think we would be greatly surprised and dismayed if we were informed that there were mortgage lenders out there who had never undertaken an income assessment of a potential borrower. I believe that this parliament should consider the financial cost that legislation change would place on the home loan sector, and whether the cost
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