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Shock, Horror! A Liberal minister finally makes a stab at lessening gouging by payday lending and rent-as-you-buy companies and Liberal MPs have a conniption

February 14, 2018 - 00:16 -- Admin

According to the Australian Treasury: “On 28 November 2016 the Government released its response to the Review of the Small Amount Credit Contract laws.The Draft Bill implements the Government’s response to the Review.”According to the Australian Securities & Investments Commission (ASIC) this bill has merit. ASIC submission to government, November 2017:2. We support the financial inclusion objectives of the Exposure Draft of the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017 (the Bill). The consumer harms that can be associated with payday loans and consumer leases are a longstanding and systemic feature of these sectors and often fall on financially vulnerable and disadvantaged consumers. We consider that the Bill will provide an effective suite of protections commensurable to the risk of harm to consumers from these products, balanced against the need to ensure that the industry can remain viable. 3 In particular, we support the level of the cap on costs for consumer leases proposed in the Bill. We expect a cap set at this level will address the excessive costs some lessors charge consumers, while still allowing a viable and sustainable consumer lease sector. 4 We also support the introduction of the Bill’s comprehensive anti-avoidance regime, which will benefit both consumers and compliant businesses. These measures will be essential to address the increased risk of avoidance activity following the introduction of the reforms.Yet this is the response from Liberal Party backbenchers.........The Courier Mail, 12 February 2018:IRATE backbenchers have revolted over Financial Services Minister Kelly O’Dwyer’s tough payday lending draft laws and have successfully enlisted Treasurer Scott Morrison to reverse Cabinet’s support of the Bill.As the Turnbull Government desperately searches for a circuit breaker from Barnaby Joyce’s sex scandal, frustrations have spilt over against Ms O’Dwyer’s original handling of new laws targeting payday lenders and rent-to-buy businesses, with backbenchers complaining to the Prime Minister.A bloc of about 20 backbenchers, including several in Queensland, are warning Ms O’Dwyer’s reforms will send some businesses broke and are an affront to Liberal values.In a move that will be pilloried by consumer groups angry over rent-to-buy lenders charging up to 800 per cent interest, a group of MPs, labelled by some in the Government as the “Parliamentary Friends of Payday Lenders” – a title that is angering the bloc – has convinced Mr Morrison to retreat on parts of the draft laws.It would be an embarrassing move for Cabinet, which ticked off on the reforms last year.