News

The Financial Rights Legal Centre, Mob Strong Debt Help, and Consumer Action Law Centre welcome the proposed reforms to Centrepay announced by Minister Bill Shorten this morning. These reforms include important consumer protections that consumer advocates across the country have been calling for.

Centrepay is an invaluable service for social security recipients, but consumer advocates have been raising concerns about its misuse for decades. We applaud Minister Shorten for his willingness to take up the bat for people who have been let down by successive governments which failed to act on the reported misuse of Centrepay.

The reforms announced today will restore Centrepay’s original purpose – that is, it should only be used to make voluntary regular payments for essential bills and expenses.

Some of the most important reforms that will be phased in beginning next year include:

• The proposed removal of high-risk service reasons like funeral expenses, consumer leases and household goods
• Going forward new businesses signing up to Centrepay will be held to a higher standard before being able to access people’s Centrelink income
• Centrepay should finally have some enforcement and compliance tools to hold businesses accountable for following the rules
• It will be much easier for Centrepay users and consumer advocates to make complaints about unscrupulous businesses
• Businesses will no longer be able to sign people up for never-ending deductions with no target amounts or end dates.

Julia Davis, Senior Policy & Communications Officer at the Financia Rights Legal Centre says “We are reassured that these proposed reforms will proceed next year since some new and critical protections have already been put in place including mandatory end dates and deduction limits for clothing and household goods and a pause on onboarding new risky businesses.

“Consumer groups have been calling on successive governments to remove consumer lease companies and funeral expenses providers from Centrepay for over a decade. These announcements are a long-time coming and have been the result of years of consistent advocacy.”

Bettina Cooper, Mob Strong Debt Help Financial Counsellor and Strategy Lead adds “We commend the Centrepay reform team’s engagement with First Nations and other consumer advocates this year. This has been a true consultation. All government departments can learn from their open and collaborative approach to achieve fair outcomes.

“Services Australia’s Centrepay reform team is a good example for how government departments can do effective consultation with consumer groups, especially First Nations advocates to improve outcomes for vulnerable consumers.”

Shelley Hartle, First Nations Policy Officer at the Consumer Action Law Centre says that consumer advocacy organisations across the country have long called for better consumer protections within Centrepay.

“For too long, our clients have been ripped off by dodgy consumer lease providers, who took their social security benefits to pay for highly overpriced ‘leases’ for white goods or furniture etc. These unfair lease agreements typically stretch over multiple years and once paid out, the client has to pay even more to own the item outright. These predatory businesses and many others like them have been cashing-in on their status as approved Centrepay providers, which customers see as an indication they are trustworthy.“

ENDS

Media contact: media@financialrights.org.au or 0457 024 683