Page 1822 - Week 07 - Wednesday, 22 August 2007
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MR MULCAHY (Molonglo) (11.05): I welcome the opportunity to speak on this motion of Dr Foskey and in support of the amendment circulated in Mr Stefaniak’s name. The amendment achieves much the same outcome as the government one—I would suggest that it is a little more crisp and succinct—so I am hopeful that the government will see its way clear to support that.
Whilst I note the first three points of the Greens’ motion, the opposition will not be supporting the calls of the ACT government to implement recommendation 7 of the report of the Consumer Law Centre of the ACT titled They want to take our house or any proposed accompanying timeframe.
Let me say at the outset that, while I do not have any problem debating this issue, I find it remarkable that Dr Foskey has not consulted with relevant industry groups, like the Australian Bankers Association, before putting it on the notice paper. The Greens’ constant refusal to deal with mainstream groups is intriguing; it is curious indeed. When they do not make any effort to receive the best possible advice, but in fact gravitate to the fringe, it is no wonder that they remain very much a fringe party.
I have reviewed the report They want to take our house. Certainly the jump in home repossessions from 2004 to 2005 is a matter of some concern and worthy of note. I would, however, be interested to see data from 2006 and into 2007 to know for sure that the trend identified by the author of the report is continuing. There is some dispute also as to whether there is connection between low doc, no doc, assets lending and the rate of default.
However, some of the case studies detailed in the report are extremely concerning. Predatory lenders should be stopped or prevented from abusing the system and putting people’s financial affairs at risk. In evidence to a House of Representatives economics committee inquiry into lending practices, the chief executive officer of the Mortgage and Finance Association of Australia estimated that predatory lenders constitute no more than 0.5 per cent of the mortgage market but that “the damage they do to vulnerable borrowers and the reputation of the industry is immense and unconscionable”.
Although there is protection in the existing uniform consumer code, it probably needs further work. Misleading behaviour by predatory lenders or brokers like that detailed in case studies in the report is unacceptable, but it is not uniform across the industry. This seems to be the essential problem that is not encapsulated sufficiently in Dr Foskey’s motion. She notes the increase in non-bank lenders in the home loan market, but makes no concession to the fact that not all of these institutions prey on consumers. The so-called low doc and no doc loans—where limited, if any, documentation proving an applicant’s income is required—are the vehicle by which many people can overextend themselves. They are also the types of loans that are exploited by predatory lenders and some brokers.
There is, however, a distinction to be drawn here. People have to have responsibility for their own actions and ensure that they do not overextend themselves. There must be a measure of personal responsibility that cannot be regulated; this must apply. However, it is true that protection is needed from predatory brokers who seek to mislead lending applicants.
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