Submission: Credit hardship obligations—outstanding issues

Consumer Action, Consumer Credit Legal Centre NSW, and Financial Counselling Australia have made a joint submission on Australian Securities and Investments Commission’s discussion paper Credit Hardship Obligations—Outstanding Issues.

Briefly, this submission argues that:

  • Regarding the transitional hardship arrangements:
    • we do not believe there is a justification for a simple arrangement regime, and the current arrangement—where lenders do not have to provide written notice for any arrangement of 90 days or less—is a disproportionate response to the concerns raised by industry;
    • however, we are willing to accept a simple arrangement regime if the 90 day threshold is reduced to 30 days and additional protections are provided.
  • We do not support further definition of what constitutes ‘hardship’ or a hardship ‘notice’. We believe that drawing hard distinctions around what constitutes ‘notice’ or ‘hardship’ is contrary to the intent behind the hardship provisions and indeed contrary to modern industry practice.
  • We strongly oppose extending time periods for debt buyers to respond to hardship requests.
  • Regarding the interaction between credit reporting and hardship:
    • where a hardship variation allows that a certain payment need no longer be made, the debtor’s credit file should not indicate in any way that a payment was due and not made;
    • extra guidance should be provided to industry, consumers and community sector advice services on how the new credit reporting law interacts with hardship. Guidance could be jointly developed between ASIC and the OAIC.
  • Lenders should not require consent from a joint debtor or co-borrower before deciding a hardship application. The guidance provided in Financial Ombudsman Service’s document The FOS approach: Dealing with Common Financial Difficulty Issues is capable of dealing with the questions raised in the consultation paper.

To read our submission click: Credit hardship obligations—outstanding issues.

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