News

The Commonwealth Ombudsman recently handed down its final decision on Consumer Action Law Centre’s complaints about Services Australia failing to enforce the Centrepay Policy against predatory consumer lease providers.

Consumer Action complained to the Commonwealth Ombudsman about the inadequate response of Services Australia (previously Department of Human Services) to complaints made on behalf of 11 clients who had made payments for consumer leases through Centrepay. A detailed summary of the Ombudsman’s decision is available here.

Centrepay is a priority payment system that allows approved businesses to deduct their fees directly from people’s Centrelink payments before the money reaches their bank accounts. The use of Centrepay is primarily governed by Service Australia’s Centrepay Policy.

Consumer Action argued that Services Australia had failed to respond appropriately to systemic breaches of the Centrepay Policy by consumer lease providers, that are approved to deduct repayments for leases through Centrepay.

The Ombudsman agreed with Consumer Action’s concerns that Services Australia was not adequately enforcing its own Policy against consumer lease providers. As a result of the Ombudsman’s investigation, Services Australia is reviewing its Centrepay Policy, including in relation to consumer leases.

“It is good news that Services Australia is reviewing their Centrepay Policy, and I hope the review agrees that consumer lease providers should no longer be allowed to make deductions through Centrepay,” said Consumer Action CEO Gerard Brody.

“Allowing consumer lease providers to charge deductions for high cost credit products through the Centrepay system, even after serious misconduct concerns have been raised, is hurting low-income individuals and families,” he said.

One of the key points raised in Consumer Action’s complaints is that consumer leases are a high-cost but low-value product and under current Centrepay Policy, payments for such  goods or services should be excluded.

This problem was also recognised last month by the Government-led Senate Economics Legislation Committee, after hearing evidence of the harm being caused by consumer leases having access to Centrepay. The Committee supported excluding consumer lease providers from Centrepay, in its Report on the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 (No. 2) (the SACC Bill).

“In 2015, a private members’ bill which excluded consumer leases from Centrepay passed the Senate with support from the ALP and then crossbench. That bill did not proceed due to lack of Government support. It’s  now time for the Government to act,” said Mr Brody.

“Nobody should be forced to prioritise repayments for an expensive consumer lease before their essentials, like food and housing. We call upon the Minister for Government Services to stop this harm and kick consumer lease providers off Centrepay as soon as possible.”

ENDS