Consumer groups slam move to remove responsible lending law

Removing credit protections will cause harm to people and the economy 

 CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Financial Rights Legal Centre have responded to the Government’s announcement that it will remove credit protections for borrowers saying right now what people need is more income, not more debt.

 Government’s proposed reforms will remove bank responsibility to customers, opening up new opportunities for banks to aggressively sell debt.

Quotes attributable to Karen Cox, CEO of Financial Rights Legal Centre and opening witness to the Banking Royal Commission

 “The problem people are having right now is too much debt and not enough income. The Government’s solution is to take on more debt with fewer protections. Unsustainable debt hurts real people and is a short-sighted fix for a flailing economy.

 “Watering down credit protections will leave individuals and families at severe risk of being pushed into credit arrangements that will hurt in the long term.

 “Our service helped thousands of Australians drowning in debt and we continue to see legacy debt that predates the Hayne Royal Commission. How can we have so quickly forgotten the hard lessons from the GFC and the Hayne Royal commission?”

 Quotes attributable to Fiona Guthrie, CEO of Financial Counselling Australia

 “As we learnt to our cost during the GFC, weaker lending standards mean people will be loaded up with as much debt as possible. There is significant profit to be made in pushing borrowers to the edge.

 “Removing responsible lending obligations will free banks up to aggressively push credit onto their customers.”

 Alan Kirkland, CEO of CHOICE

 “We got rid of the idea of ‘buyer beware’ in consumer law decades ago. To make it the principle that guides lending in the middle of a recession has disaster written all over it.

 “Piling more debt onto people who can’t afford it has never solved an economic crisis.

 “Products like credit cards are complex. That’s why banks make so much money out of them. Banks are in a much better position to assess a person’s ability to repay, so they need to shoulder some of the responsibility.”

 Quotes attributable to Gerard Brody, CEO of Consumer Action

 “Responsible lending laws ensure safe access to credit.”

“The Commonwealth Bank recently said that the flow of credit is above pre-COVID levels and that lending is growing at a strong pace. And none of the big banks opposed the responsible lending laws at the recent House of Economics committee hearings.”

 “Leaving people with more debt than they can afford is no way out of an economic crisis. Pushing too much credit that people can’t afford to repay creates hardship, stress, anxiety for individuals and families.”

Media contacts

CHOICE – 0430 172 669

Consumer Action – 0413 299 567

Financial Rights – 0414 729 006

Financial Counselling Australia – 0402 426 835



There is no issue with access to credit – lending is still growing significantly. The ABS July 2020 data on loan commitments shows that the number of new housing loans issued was 11.8% higher than July 2019. See – ABS, Lending indicators, July 2020

Under the National Credit Act, responsible lending laws do not apply to small business lending.

The Banking Royal Commission did not recommend any changes to responsible lending laws. Commissioner Hayne concluded:

“I am not persuaded that the NCCP Act’s framework for responsible lending to consumers needs change. The responsible lending issues identified during the Commission’s hearings will be resolved by banks applying the law as it stands.” (p.117 Final Report)



Media contact: Mark Pearce, Media and Communications Adviser | Consumer Action Law Centre | 0413 299 567 |

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