The Consumer Action Law Centre welcomes the opportunity to comment on the independent review of the Centrepay system.
Consumer Action believes that Centrepay can be a valuable financial management tool. However, it has a number of problems that mean Centrepay may be causing harm to those who use it.
Key problems are that:
there is a lack of a clear statement of the purpose behind Centrepay;
Centrepay is permitted to be used as a marketing tool for businesses, and in particular it seems to be encouraging development of business models which sell overpriced products to low income consumers;
Centrepay is being used to facilitate ‘Rent to Own’ transactions. These transactions have substantially the same effect as credit contracts, so should be treated in the same way—that is, Centrepay should not be permitted to be used to pay off Rent to Own transactions except in very limited cases (for example Centrepay can be used for credit contracts taken out under the No Interest Loan Scheme and similar community/government programs).
Centrepay is being used by some businesses as a de facto debt collection device.