|
| |
Defined Terms and Documents
By email: economics.sen@aph.gov.au
Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra
ACT 2600
Dear Committee Members,
Consumer protection in the banking, insurance and financial sector
The Consumer Action Law Centre ( Consumer
Action) is pleased to provide a submission to the
Senate Inquiry into consumer protection in the banking, insurance and financial
sector.
We believe there are significant cultural and regulatory changes required in
the banking, insurance and financial sector in order to improve outcomes for
consumers. But a fairer banking, insurance and financial sector doesn’t just
benefit consumers. It will enhance confidence and trust in the financial system
and ultimately create a more effective financial system for industry and
consumers alike.
We have seen an acknowledgement by policy makers in recent years that
consumers do not end up with unsuitable products only because of their own
limitations, but because of poor or unfair processes by businesses. 1
However, we are still awaiting the legislative reform and
enforcement necessary to turn this ‘shift in focus’ into a reality.
1 For example, the Financial System Inquiry Final Report, November 2014, p.
xx. Available at: http://fsi.gov.au/files/2014/12/FSI_Final_Report_Consolidated20141210.pdf.
We need to change from consumer protection regulatory system based on
disclosure to one focusing on fair treatment of consumers. Implicit in that
change is an acceptance that consumers are not necessarily capable of absorbing
all the information presented to them and, even if they do, various cognitive
limitations and biases limit the ability of people to make rational product
choices. It also requires an acceptance that remuneration and banking culture
has a strong impact on behaviour and the fair treatment of consumers.
Our further views in response to each of the terms of reference are outlined
below. 2
|
Summary of recommendations
Any failures that are evident in the current laws and regulatory
framework
Add-on insurance
1. Introduce delayed opt in sales for add-on insurance. Add-on
insurance should only be sold through a delayed opt-in sales model,
where the consumer must proactively decide to buy insurance up to a week
after taking the car or loan.
2. Ban upfront add-on insurance premiums. Financed upfront premiums
should be banned and insurers should move to transparent regular
instalment payments instead.
3. Make insurance suitable. Insurers and car dealers should be
required to ensure that add-on insurance is only sold to people who will
be eligible to make claims and will find it useful.
4. Introduce design and distribution obligations and empower the
Australian Securities and Investments Commission ( ASIC)
to make product interventions in relation to financial products,
including add-on insurance.
Credit cards
5. Tighten responsible
lending obligations for credit cards. Ensure credit cards are only
provided to people who can repay the full credit limit within three
years.
6. Prohibit credit card limit
increase offers. Card issuers shouldn’t be able to make unsolicited
credit limit increase offers.
7. Standardise and simplify
credit card interest calculation.
8. Facilitate online credit
card cancellations. Require card issuers to provide online card
cancellation and credit limit reduction tools.
9. Increase minimum
repayment amounts for credit cards. Help people to pay off their
account balance of their card, rather than simply carrying debt
month-to-month.
10. Require prominent
advertising of credit card interest charges and annual fees. Interest
rates and fees should be as prominent as promotional offers.
11. Extend credit card teaser
offers. Require ‘teaser’ offers such as free balance transfers and
interest free periods to be offered for a minimum of three years.
Bank fees and charges
12. Restrict fees to the banks’ actual costs. Limit credit card late
payment and ‘over-the-limit’ fees, and default and overdrawn account
fees, to the direct costs actually incurred by the bank.
13. Ensure that bank fees and charges will not trigger further fees.
14. Provide warnings about bank fees. Provide effective and
innovative warnings about fees having regard to behavioural economics
principles.
15. Prohibit fees or penalties for visiting a physical bank branch.
16. Prohibit fees for copies of documents in certain circumstances.
Consumers should not be charged for hard copies of documents when
documents or computer access have been lost due to family violence or
natural disaster, or the person receives Centrelink benefits.
17. Prohibit default or similar fees while the bank is considering a
hardship arrangement.
Responsible lending
18. Banks should implement best practice in relation to responsible
lending, particularly when undertaking loan suitability and
affordability assessments.
19. Increase penalties and enforcement action for breaches of
responsible lending.
20. Extend the proposed design and distribution obligations, and ASIC
product intervention power, to credit.
21. Ban mortgage broker commissions and sales-based payments for bank
staff selling home loans.
22. Increase qualification requirements for mortgage brokers and
banks’ home loan lending staff.
Payday loans and consumer leases
23. Implement the SACC Review recommendations as soon as possible.
24. Introduce a 48 per cent cap on costs charged by all forms of
consumer credit, including payday loans and consumer leases.
Any failures that are evident in the enforcement of the current laws
and regulatory framework, including those arising from resourcing and
administration
25. Introduce an industry funding model for ASIC.
26. Provide ASIC with additional funding that enables it to exercise
its enforcement powers effectively to protect consumers and enhance
confidence in the market.
27. Strengthen the Australian Credit Licence and Australian Financial
Services Licence regimes to enable ASIC to deal more effectively with
poor behaviour and misconduct.
28. Increase the maximum penalties that can be imposed for
contravening financial services and credit consumer protection laws.
The impact on consumer outcomes of executive and non-executive
remuneration, incentive-based commission structures, and
fee-for-no-service or recurring fee structures.
29. Require targets for staff to relate to customer outcomes and the
appropriateness of products sold, rather than sales.
30. Prohibit conflicted remuneration structures whereby an employee’s
commissions are forfeited unless they have sold a sufficient number of
add-on products (e.g. CCI).
31. Prohibit ‘accelerator payments’, which encourage staff to
intensify their sales activity once they have reached a certain sales
volume threshold.
32. Require performance assessments of managers to be based on
non-sales metrics, such as how well the corporate aims of the
organisation are met.
The culture and chain of responsibility in relation to misconduct
within entities within the sector
33. Ensure design and distribution obligations set out a clear chain
of responsibility that will not permit distributors to be wilfully blind
when issuers fail to identify a target market appropriately or provide
inadequate instructions.
The availability and adequacy of redress and compensation to victims
of misconduct, including options for a retrospective compensation scheme
of last resort
34. Introduce a last chance compensation scheme for victims of
misconduct.
35. Integrate the Superannuation Complaints Tribunal and Credit and
Investments Ombudsman into the Financial Ombudsman Service.
The availability and adequacy of legal advice and representation for
consumers and victims of misconduct, including their standing in the
conduct of bankruptcy and insolvency processes
36. Provide additional funding for free legal and financial
counselling services to meet the huge demand for assistance
37. Establish a legal service to provide assistance around investment
disputes where they cause substantial detriment.
38. Increase the number of co-located free legal services and
financially counselling across Australia.
|
About Consumer Action
Consumer Action Law Centre is an independent, not-for profit consumer
organisation based in Melbourne. We work to advance fairness in consumer
markets, particularly for disadvantaged
and vulnerable consumers, through financial counselling, legal advice and
representation, and policy work and campaigns. Delivering assistance services to
Victorian consumers, we have a national reach through our deep expertise in
consumer law and policy and direct knowledge of the consumer experience of
modern markets.
1. Any failures that are evident in the current laws and regulatory framework
It is clear that the current regulatory framework for the banking, insurance
and financial sector is not sufficient to deliver fair treatment to consumers.
The most significant problems relate to consumers being sold financial products
that are not suited to their needs and circumstances. Although the regime should
not be expected to prevent all consumer losses, we need to see a shift in focus
that strengthens financial firms’ accountability.
We have provided further details about a number of key failures that are
evident in the current laws and regulatory framework below.
A. Sale of junk insurance
We have been concerned about the sale of ‘junk insurance’ to consumers for
many years. We call it ‘junk insurance’ because this type of insurance is
expensive, bad value and often very difficult to make a claim. Junk insurance,
also referred to as ‘add-on insurance’, is typically sold by a car dealer when
you buy a vehicle. It includes Consumer Credit Insurance ( CCI),
Guaranteed Asset Protection (GAP)
insurance, loan termination (‘walkaway’) insurance, tyre and rim insurance and
mechanical breakdown insurance. Extended and dealer warranties are also sold as
add-ons. While 75 per cent of add-on insurance is sold in car yards, the
remaining amount is sold by banks, credit unions and finance companies when a
consumer takes out a credit card or loan.
ASIC has reported on the clear market failures with add-on insurance,
particularly policies sold through car yards. The problems include: 2
2 Consumer Action, Junk
Merchants: How Australian are being sold rubbish insurance, and what we can do
about it, December 2015. Available at: http://consumeraction.org.au/junk-merchants-report-how-australians-are-being-sold-rubbish-insurance-and-what-we-can-do-about-it/;
Australian Securities and Investments Commission,
REP 470 Buying add-on insurance in car
yards: Why it can be hard to say no, February 2016. Available at: http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-470-buying-add-on-insurance-in-car-yards-why-it-can-be-hard-to-say-no/;
Australian Securities and Investments Commission,
REP 471 The sale of life insurance through
car dealers: Taking consumers for a ride, February 2016. Available at:
http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-471-the-sale-of-life-insurance-through-car-dealers-taking-consumers-for-a-ride/;
Australian Securities and Investments Commission,
REP 492 A market that is failing consumers:
The sale of add-on insurance through car dealers, September 2016. Available
at: http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-492-a-market-that-is-failing-consumers-the-sale-of-add-on-insurance-through-car-dealers/.
very poor value products, with an
overall claims ratio of just 9%—compared with home insurance at 55% and
comprehensive car insurance at 85%;
insurers paying four times more to
car dealers in commissions ($602 million in 2013-15) than to people on their
insurance claims ($144 million);
car dealer commissions as high as
79%;
life insurance sold at up to 18
times the cost of term life insurance sold through other channels; and
insurance sold to people who
cannot claim on it—for example, unemployment cover sold to people who were
already unemployed.
Consumer Action’s website DemandARefund.com has facilitated more than 280
claims for add-on insurance refunds in under a year, totaling over $500,000.
DemandARefund claims show big problems with inappropriate sales tactics. Of the
people who have claimed refunds:
21% did not know they had bought
add-on insurance;
28% thought the add-on product was
mandatory; and
31% felt they had been rushed or
pressured into buying add-on insurance.
| Recommendations
1. Introduce delayed opt in sales for add-on insurance. Add-on
insurance should only be sold through a delayed opt-in sales model,
where the consumer must proactively decide to buy insurance up to a week
after taking the car or loan.
2. Ban upfront add-on insurance premiums. Financed upfront premiums
should be banned and insurers should move to transparent regular
instalment payments instead.
3. Make insurance suitable. Insurers and car dealers should be
required to ensure that add-on insurance is only sold to people who will
be eligible to make claims and will find it useful.
4. Introduce design and distribution obligations and empower ASIC to
make product interventions in relation to financial products, including
add-on insurance. |
B. Credit cards
Australia’s credit card debt is continuing to grow rapidly, and we are headed
towards a debt disaster. Australians owe
around $32 billion in credit card debt accruing interest. That's an average of
around $4,300 per card holder. Australians have more than 16 million credit card
accounts with total credit card limits totalling more than $151 billion. 3
3 Reserve Bank of Australia,
Credit and Charge Card Statistics - C1, March 2017. Available at: http://www.rba.gov.au/statistics/tables/.
These staggering figures are
reflected in our casework experience. Our financial counselling service,
National Debt Helpline (Victoria), receives nearly 100 calls per week alone from
people struggling with credit card debt. Nearly 50% of callers to our financial
counselling service have credit card debts exceeding $10,000. Nearly 10% of our
callers have debts exceeding $50,000, and every week we receive at least one
call from a person with credit card debt exceeding $100,000. It is not uncommon
for us to receive calls from people with up to $200,000 owing on their credit
cards.4
The scale of Australia’s credit
card industry is well known, and is likely to continue to grow in the short to
medium term. The Reserve Bank of Australia (RBA)
recently identified fee income from credit cards to be the largest earner for
major banks, compared to fee income from other banking products.5
The four major banks account for
around 80 per cent of total outstanding credit card balances,6
and are failing to compete on price, despite the cost for providing
credit actually reducing. The RBA has cut rates by 3.25% since June 2011, but
Australian credit card holders have seen no relief in the form of cuts to credit
card purchase rates. An analysis of credit card interest rates by CHOICE and
Mozo found that if credit card interest rates had moved in line with the RBA
cash rate over the last four years, Australian credit card holders would have
saved $3.49 billion in interest since mid-2011. Their analysis also found that
the average credit card rate is now 11.5 times higher than the cash rate.7
Not only are the banks failing to
compete on price, but they are failing to lend money responsibly. It is no
secret that the responsible lending standards in Australia’s credit card market
are extremely poor. Unsolicited offers of credit card limit increases also
remain common, despite reforms designed to tackle this problem in 2012. Lax
responsible lending standards and unsolicited credit offers have had the
combined result of many Australians with unsustainable levels of credit card
debt.
James’ story8
James applied for a credit card after a few months at his new job.
The credit card provider did not ask him what his purpose was, or
ask him to estimate his living expenses. The credit provider asked
for his payslips. James was offered a ridiculously high credit limit
that far exceed what he was after. He just wanted to start his
credit history and have the flexibility of a credit card, plus use
the benefits of salary sacrifice at his new job. James had to fight
with the credit card provider to reduce the limit as James knew he
was on a 12-month work contract and was inexperienced in using
credit cards. James did not want to risk it but the credit card
provider told him that it was just in case he needed it.
|
Why does it matter if Australians
are drowning in credit card debt? At an acute level, credit card debt is
dangerous as it can result in financial hardship, bankruptcy and, in some cases,
can place the family home at risk. We note that the number of people contacting
us for assistance is likely to be only a small proportion of those struggling
with credit card debt. These 'hidden consumers' are generally making minimum
monthly repayments or even above, but are paying thousands of dollars in
interest payments, reducing their income and their ability to pay for day-to-day
necessities and other productive expenditure.
Australians battling to make ends
meet are effectively cross-subsiding others who pay off their accounts regularly
and incur almost no interest. People who are unable to make repayments on time,
or overdraw their accounts, pay more fees and interest. This makes them arguably
the most profitable customers for the banks, and means they are ultimately
paying for the reward points and interest free periods the wealthy enjoy. The
banks have failed to implement the changes necessary to save Australians from
crippling debt, because the people failing to repay their credit card balances
on time are actually the most profitable.
In May 2016, Treasury recommended
a number of reforms that addressed some of the issues above.9
Phase 1 of the proposed reforms, included tightening responsible lending
obligations, prohibiting unsolicited credit limit increase offers, allowing
online card cancellation and simplifying interest calculation. These reforms
were pegged for legislation in the ‘near term’. However, we are still waiting
for exposure draft legislation to be released for consultation.
4 Based on data collected from Consumer Action's National Debt Helpline
(Victoria) service between 13 July and 7 August 2015.
5 Wilkins, Kelsy. Banking fees in
Australia, Reserve Bank of Australia Bulletin, June
2016.
6 Treasury Ministerial Brief,
Credit Card Interest Rates, 25 March 2015.
7 Please see CHOICE’s submission to the Inquiry for further details.
8 Originally published in Consumer Action Law Centre,
Submission to the Inquiry into credit card
interest rates, 10 August 2015. Available at: http://consumeraction.org.au/matters-relating-to-credit-card-interest-rates-senate-standing-committees-on-economics/.
9 Treasury, Credit cards:
improving consumer outcomes and enhancing competition,
May 2016.
Available at: http://www.treasury.gov.au/ConsultationsandReviews/Consultations/2016/Credit-card-reforms.
Consumer testing of Phase 2 of the proposed reforms, which included requiring
improved disclosure of cost, switching cards and expiry of introductory offers,
was to commence ‘shortly’ after the Treasury released its report. However, we
are also yet to hear of any behavioural testing being undertaken.
We have provided further commentary in relation to responsible lending in
section 1D below.
|
Recommendations
5. Tighten responsible lending obligations for credit cards. Ensure
credit cards are only provided to people who can repay the full credit
limit within three years.
6. Prohibit credit card limit increase offers. Card issuers shouldn’t
be able to make unsolicited credit limit increase offers.
7. Standardise and simplify credit card interest calculation.
8. Facilitate online credit card cancellations. Require card issuers
to provide online card cancellation and credit limit reduction tools.
9. Increase minimum repayment amounts for credit cards. Help people
to pay off their account balance of their card, rather than simply
carrying debt month-to-month.
10. Require prominent advertising of credit card interest charges and
annual fees. Interest rates and fees should be as prominent as
promotional offers.
11. Extend credit card teaser offers. Require ‘teaser’ offers such as
free balance transfers and interest free periods to be offered for a
minimum of three years. |
C. Bank fees and charges
Australians paid nearly $12 billion in bank fees in 2014. This is a growth
rate of 2.8 per cent—faster than the consumer price index. Credit card fees are
rising fastest, with a 5.9 per cent growth in fees in 2014. 10
Many bank fees, particularly credit card late fees (some as high as $35),
often bear no resemblance to the banks’ actual costs. The banks argue that these
fees cover their losses, but in fact they are just double dipping. For example,
credit card interest rates are already set at very high levels by the banks in
order to cover the costs involved with offering unsecured credit.
Bank fees tend to have a harsh and disproportionate impact on lower income
Australians. For people who are already struggling with debt, late fees only
make the task of repayment more difficult. An example of the disproportionate
impact bank fees can have on low-income Australians is set out below.
| Example
Credit card late payment fees can range from $9 to $40. For a single
mum receiving the Newstart Allowance, a $40 default fee can mean the
difference between buying schoolbooks or her kids’ lunches. A single mum
on Newstart receives only $285.95 per week. A $40 default fee equates to
approximately 14% of her weekly income. |
10 Wilkins, Kelsey, Banking Fees
in Australia, June 2015. Available at: http://www.rba.gov.au/publications/bulletin/2015/jun/pdf/bu-0615-5.pdf.
11 Paciocco v Australian and New
Zealand Banking Group Ltd [2016] HCA 28.
12 For example, NAB increased its credit card late payment fee
by 80% about the same time it settled a class action relating to these fees:
http://consumeraction.org.au/nab-locks-vulnerable-unfair-bank-fees-refunds/.
Unfortunately, excessive bank fees seem set to continue following a recent
High Court decision regarding ANZ’s credit card late payment fees. 11
The majority of the High Court held that ANZ was entitled
to charge late payment fees of up to $35, even though this amount did not
represent a genuine pre-estimate of the ANZ’s losses, or the costs actually
incurred by ANZ. Apparently these excessive fees protected ANZ’s ‘legitimate
interests’, which means ANZ can charge for indirect costs to the overall
business like collection costs (even if no collections actually occur). This
decision is likely to end the numerous bank fee class actions commenced against
other Australian banks, and encourage banks to increase fees.12
The High Court decision was argued on the basis that these fees were unlawful
contractual penalties. The law of contractual penalties is complex and
antiquated. Arguably, it has failed to keep abreast with developments of modern
mass-market commerce. In his judgment, Chief Justice French noted that
"statutory law reform offers more promise than debates about the true reading of
English legal history." We submit that law reform is required to ensure that
fees charged by banks reflect the cost and not be used to profit.
Public confidence in banks is low. Australians are extremely sceptical about
a sector that posts record profits year after year and yet hits them with
dubious charges every time they make the slightest misstep. We need to place
some parameters on unreasonable charges and limit the scope for abuse by the
banks.
We have outlined our recommendations for law reform in relation to bank fees
below.
|
Recommendations
12. Restrict fees to the banks’ actual costs. Limit credit card late
payment and ‘over-the-limit’ fees, and default and overdrawn account
fees, to the direct costs actually incurred by the bank.
13. Ensure that bank fees and charges will not trigger further fees.
14. Provide warnings about bank fees. Provide effective and
innovative warnings about fees (having regard to behavioural economics
principles).
15. Prohibit fees or penalties for visiting a physical bank branch.
16. Prohibit fees for copies of documents in certain circumstances.
Consumers should not be charged for hard copies of documents when
documents or computer access have been lost due to family violence or
natural disaster, or the person receives Centrelink benefits.
17. Prohibit default or similar fees while the bank is considering a
hardship arrangement. |
| Peter and Julie’s story
In 2006, Peter and Julie had been separated for at least 6 years.
Julie lived in the jointly owned matrimonial home with their two
children and Peter lived with his mother. Both were long time customers
of the Commonwealth Bank, which held all of their accounts.
Peter ran a modest small business and Julie was in receipt of
Centrelink payments. Peter was 59 years old and five years from
retirement.
Despite accepting that Peter and Julie lived separately, with a
stated combined gross income of $50,000 per year, in March 2006, the
Commonwealth Bank provided a Viridian Line of Credit for $50,000. In
August 2006, 5 months later, the Commonwealth Bank increased the limit
by a further $50,300. In 2007, the Commonwealth Bank then advanced
a $25,000 'home loan'. In total, the Commonwealth
Bank advanced Peter and Julie $125,300.
The loan applications reveal that Peter and Julie had neither savings
nor superannuation. They also reveal that the Commonwealth Bank required
no documents (such as bank statements, tax returns, profit and loss
statements) whatsoever from Peter to check if his business was
profitable, which it was not. The CBA sought no information nor
supporting documentation to demonstrate Peter and Julie’s capacity to
service the loans. It contacted neither of them during the approval
process.
In 2015, when the Consumer Action Law Centre raised this case with
the Commonwealth Bank, the most it would offer was time for Peter and
Julie to sell their property. It saw nothing wrong with its lending.
After the Consumer Action Law Centre complained to the Financial
Ombudsman Service in 2016, the Ombudsman found that none of the loans
should have been made because Peter and Julie could not afford to pay
them.
Concerns have been raised in a number of forums about banks’ lax
responsible lending practices, particularly in relation to credit cards.
The banks’ own Code Compliance Monitoring Committee (the
CCMC) recently found significant issues with banks’ credit
card responsible lending practices.14 The CCMC
identified a number of potential issues regarding:
14 Code Compliance Monitoring Committee,
Own Motion Inquiry Provision of
Credit, January 2017. Available at:
https://fos.org.au/custom/files/docs/ccmc-provision-of-credit-own-motion-inquiry-report.pdf.
15 Australian Securities and Investments Commission,
17-048MR ASIC commences civil
penalty proceedings against Westpac for breaching home loan responsible
lending laws, 1 March 2017. Available at:
http://asic.gov.au/about-asic/media-centre/find-a-media-release/2017-releases/17-048mr-asic-commences-civil-penalty-proceedings-against-westpac-for-breaching-home-loan-responsible-lending-laws/.
banks not making inquiries about a customer’s purpose for credit
card applications;
the collection and verification of current customer information
when processing applications for credit card limit increases; and
the assessment of a customer’s ability to repay a credit card
balance.
The CCMC also found that credit cards account for 68% of applications
for unsecured credit, and automated systems are used to process
approximately 97% of applications for unsecured credit. Where an
automated system is used at some stage of the credit assessment process,
65% of unsecured credit applications are approved. The high use of
automated processes is particularly worrying given the banks legal
obligations to make reasonable inquiries about consumers’ financial
situations, and to properly verify this information.
But banks’ poor lending behaviour has not been limited to credit
cards or relatively small personal or car loans. We have also seen lax
lending standards in the home loan market. This was highlighted by ASIC
recent enforcement action against Westpac for alleged responsible
lending contraventions. On 1 March 2017, ASIC commenced civil penalty
proceedings in the Federal Court against Westpac alleging that in the
period between December 2011 and March 2015 Westpac failed to properly
assess whether borrowers could meet their repayment obligations before
entering into home loan contracts.15 We need only
remember the Global Financial Crisis to realise the danger of providing
home loans to borrowers who will struggle to make repayments.
15
Poor lending standards and advice by mortgage brokers are also
concerning. These problems were highlighted in CHOICE’s shadow shopping
report in 2015. An expert panel made a scathing assessment of the advice
of 15 mortgage brokers, which represented three of the biggest mortgage
broker businesses in Australia. The panel rated 7 brokers as ‘poor’,
with only one broker managing to score a ‘good’ rating. Problems
included a couple who wanted to buy a $600,000 investment property but
were advised to take out a $1m loan secured against their home, and a
broker pushing his own company's product even while acknowledging that
other lenders offered a better loan.16 ASIC is
shortly due to release its own research into the mortgage broking
industry, which will provide additional data about the practices of the
lenders and their distributors.
We strongly recommend that the proposed DADOs, and ASIC PIP, apply to
credit in order to strengthen protections for consumers. Responsible
lending offers different, and lesser, protections than the proposed
obligations. Increasing the accountability of credit providers and
distributors, who have so far failed to design or distribute their
products safely, is necessary to save Australia from its looming debt
disaster.
The impact of being given an unsuitable loan, whether a mortgage or a
credit card, cannot be underestimated. The stress and anxiety of trying
to make repayments you simply cannot afford is overwhelming. We have
provided further comments in relation to the impact of poor conduct on
consumers in section 3 below.
| Recommendations
18. Banks should implement best practice in relation to
responsible lending, particularly when undertaking loan
suitability and affordability assessments.
19. Increase penalties and enforcement action for breaches of
responsible lending.
20. Extend the proposed design and distribution obligations,
and ASIC product intervention power, to credit.
21. Ban mortgage broker commissions and sales-based payments
for bank staff selling home loans.
22. Increase qualification requirements for mortgage brokers
and banks’ home loan lending staff. |
|
| |
|