Consumer Action Law Centre has welcomed the Federal Government’s proposal to extend consumer protections to short term and indefinite leases, which aren’t covered by national credit laws. These leases typically involve leasing household goods with huge price tags to low income Australians who are shut out of the mainstream credit market and can worsen their financial hardship.
Consumer Action raised regulatory gaps with short term and indefinite leases with the Assistant Treasurer, Senator the Hon Arthur Sinodinos, shortly after he assumed his portfolio and commends the Minister for tackling the issue so early in the Government’s term.
‘Minister Sinodinos has shown a willingness to get on the front foot and seek improvements in an industry which targets low income and vulnerable consumers, and we will play an active role in the consultation process,’ said Gerard Brody, CEO of Consumer Action.
‘Short-term or indefinite lease providers aren’t licensed or bound by responsible lending laws, and there is evidence that consumers are being taken advantage of’ said Mr Brody. ‘Consumer complaints to us suggest that some lessors structure agreements to be short-term or indefinite, so as to avoid the application of credit laws’.
Consumer Action is also eager to work with the Government to improve other lease products. Mr Brody said allowing lease providers access to Centrepay, the government’s free direct bill-paying service for Centrelink recipients, and a lack of disclosure around the overall cost of leases were priorities for his centre.
‘Centrepay is designed to allow welfare recipients to prioritise the payment of rent and utilities, but we’re seeing lease providers use the system to secure priority payments for home entertainment systems, expensive phones and other non essential items. And to make matters worse these leases usually end up costing customers three times more than standard retail price.
‘We’re concerned that lease providers advertise an attractive but misleading weekly price and fail to disclose the overall cost of the lease. We think that if consumers could see that they’re paying three times the standard retail price they’d think twice before entering one of these leases. Disclosing the total price would also improve competition as customers could then compare prices between retailers and identify the cheapest deal,’ said Mr Brody.
Australians struggling to meet lease commitments should contact a free and independent financial counsellor on 1800 007 007.
Note: Consumer Action’s report comparing the cost of leasing household goods with the standard retail cost of these products is available here.
Media contact: Dan Simpson, 0413 299 567