Writer's CD submission to RBA sent 8 Dec 2011 Defined Terms and Documents
5 Ronald Ave
Freshwater NSW 2096
0434 715.861
17 July 2015
Mr. James Higgins 03 9602.6053
Slater & Gordon JamesHiggins@SlaterGordon.com.au
485 La Trobe Street,
Melbourne, Victoria 3000
Dear Mr. Higgins
Submission Letter To Slater & Gordon:
Class Action representing Eligible Plaintiffs, namely Financially Uneducated And Vulnerable Australians - identified in Productivity Commission and ABS published reports - that have suffered from Numeracy And Literacy Discrimination by some Credit Card Issuers that have deployed Unconscionable Conduct
Such Eligible Plaintiffs have -
I. used Multiple Credit Cards and have been charged Usurious Unsecured Personal Loan Interest Rates which equate to a Comparison Rate Over 20% Per Annum which have aggregated to >$5,000 in Interest And Fees in any continuous three year period; and
II. experienced Extreme Financial And Emotional Distress
Class Action against the Reserve Bank of Australia ("RBA") for breaching its Statutory Duty and Fiduciary Duty due to not complying with its Parliamentary Bestowed Mandate to -
(i) ensure "...the economic prosperity and welfare of (all of) the people of Australia"; and
(ii) not merely ensure "...the economic prosperity and welfare of..." the Financially Educated which would usually include employees of the RBA,
by condoning Unconscionable Conduct by some Credit Card Issuers (as exampled in Labyrinth of ‘Concealed Spiders’) that engage in Numeracy And Literacy Discrimination and may also pay (subscribe to) Dubious Credit Card Comparison Websites to mislead and prey upon Financially Uneducated And Vulnerable Australians
The Eligible Plaintiffs seek Compensatory Damages from the RBA for -
(i) condoning Credit Card Issuers overtly preying upon 'level 1' and 'level 2' Australians (as decreed by the Productivity Commission's Staff Working Paper "Links Between Literacy and Numeracy Skills and Labour Market Outcomes" dated Aug 2010 and explained in 'Foundation Skills Attainment' and ABS' PIAAC 2011-12) by touting Credit Cards that charge Usurious Unsecured Personal Loan Interest Rates advertised under a Labyrinth of ‘Concealed Spiders’ which includes Balance Transfer Interest-Free Period Offers; and
(ii) not drawing upon the regulatory powers vested in the RBA's Charter to redress (i) above
The RBA has made efforts to divest itself of its Parliamentary Bestowed Mandate by seeking to pass its obligations to regulate 'inter alia' Credit Card interest rates to APRA and ASIC. Notwithstanding, the RBA is still bound by its Parliamentary Bestowed Mandate - The Reserve Bank brought credit card schemes in Australia under its regulatory oversight on 12 April 2001
The Quantitative, Qualitative, 'Credit Card Distress' Authorities, Numeracy And Literacy Authorities And Newspaper Article - Evidence Of Unfair Credit Card Costs, that is patently apparent to any appointed 'watchdog' regulator, has behoved the RBA to have -
(i) relied upon the Payment Systems (Regulation) Act 1998 which gives the RBA "extensive powers" to "...gather information from a payment system or from individual participants" to require Credit Card Issuers to furnish quarterly returns which identify how much interest and fees that each Numeracy And Literacy Range Of Australians is paying towards Credit Card Issuers' Interest And Fees Revenue, to thereby hold empirical evidence that level 1 and level 2 Australians are not being discriminated against and not being preyed upon by some unscrupulous Credit Card Issuers;
(ii) regulated the maximum interest rate that could be charged by Credit Card Issuers for Purchases and for Cash Advances in line with other Unsecured Personal Loan Rates, say 10% and 11% respectively above the official Cash Rate;
(iii) regulated the Retail Supply Side of Credit Card Products to employ "cost-based benchmarks" to apply the User Pays Principle as requested in Section 8 of the Writer's extensive CD submission to RBA sent 8 Dec 2011;
(iv) prosecuted some Credit Card Issuers for misleading advertising of some of their Credit Card Products as -
* acknowledged by Quotes from reputable authorities about unconscionable advertising of Credit Cards by Credit Card Issuers; and
* evidenced in Labyrinth of ‘Concealed Spiders’ - see Four Examples; and
(v) informed the Government, pursuant to section 11 "Differences of opinion with Government on questions of policy" of The Reserve Bank Act 1959, as amended, that the RBA's monetary and banking policy needs to regulate to implement B)(a) and B)(b) in Section 8 of the Writer's CD submission to RBA sent 8 Dec 2011 "for the economic prosperity and welfare of (ALL) the people of Australia" and not merely for "lucky" Australians who are proficient to participate in a knowledge-based economy because they are assessed to be within level 3 or above
Labyrinth of ‘Concealed Spiders provides four patent examples of Unconscionable Conduct by Credit Card Issuers in presenting their various Credit Card Products to extricate maximum Interest And Fees Revenue from Financially Uneducated Australians which constitutes Numeracy And Literacy Discrimination - also acknowledged in Quotes from reputable authorities about unconscionable advertising of Credit Cards by Credit Card Issuers.
The Writer's detailed submission to the RBA on CD dated 8 Dec 2011 -
(a) set out in Attachment 'A' evidence of the enormous variances in interest costs from around Unsecured Personal Loan rates of 13% circa up to a usury 21.84%, high annual fees and high 'loyalty reward points' as high as 2½ points for every $1 spent and the mischievous methods used by some Credit Card Issuers to mislead prospective Credit Cardholders;
(b) asserted that level 1 and level 2 Australians, referred to as the 'Have Nots', are exploited by level 3, level 4 and level 5 Australians, which include the staff and board of the RBA, referred to as the Financially Educated 'Haves', because the Financially Uneducated And Vulnerable 'Have Nots' Lack Financial Acumen and are paying Usurious Unsecured Personal Loan Interest Rates and therefore unjustly paying the costs/profits of Credit Card Issuers whilst the 'Haves' enjoy Lines Of Credit and at effectively no cost - see RBA's acknowledgement of this in Extract from RBA's Consultation Document;
(c) asserted that Attachment 'H' titled All Smoke and Mirrors provided an unfortunate testament of the prudential role performed by the RBA -
(i) entrusted to be banker and financial agent for the Commonwealth; and
(ii) with a charter to protect "....the economic prosperity and welfare of the people of Australia".
as a
Dubious Credit Card Comparison Website,
namely
CreditCards.com (parent site of
australia.creditcards.com)
was being paid by some
or all of
Our Bank/Issuer Partners (ANZ, Aussie, Bank Mecu, Bankwest, citi, NAB, St George, Virgin, Westpac)
for providing links to those banks' website credit card products at
,
because some like NAB's Low Interest Credit Card, Bank mecu's Low Interest Rate
Credit Card
and
Bankwest's
Breeze MasterCard were
patently deceptive - interestingly following the
Writer's rebuke of the RBA,
australia.creditcards.com
still lists all its
previous Australia Credit Card Issuers, but all the URLs/links have been
dismantled, perhaps the RBA directed these Australian
Credit Card Issuers to
sever their subscriptions to
australia.creditcards.com;
and
(d) beseeched the RBA (in Section 8) to regulate Credit Card Issuers to apply the User Pays Principle by adopting the eight recommended changes to credit card pricing so that all Credit Cardholders contributed to the delivery costs; and
(e) behoved in my Section 12. 'Conclusion' for the RBA's Board to -
"(b) inform the Government, pursuant to section 11 "Differences of opinion with Government on questions of policy" of The Reserve Bank Act 1959, as amended, that the RBA's monetary and banking policy needs to regulate to implement B)(a) and B)(b) above "for the economic prosperity and welfare of (ALL) the people of Australia" and not merely for "lucky" Australians who are proficient to participate in a knowledge-based economy because they are assessed to be level 3 and do not over-commit immediately prior to an economic slowdown."
Re (e)(b) above, the Writer -
(A) assumes that the RBA's Board did not invoke its authority, pursuant to section 11 "Differences of opinion with Government on questions of policy" of The Reserve Bank Act 1959, as amended, to inform the Government of the need to implement a User Pays Principle; and
(B) opines that thereby the RBA abrogated its obligations to so exercise that dedicated authority in section 11; bestowed upon the RBA to ensure objectivity and avoid conflict of interest.
Cash Rate was 4.25% when the Writer sent his afore-mentioned User Pays Principle submission to the RBA on 6 Dec '11. It is presently 2¼% lower @ 2%, but interest rates on Credit Cards have not fallen with too many Credit Cards charging 20% on Purchases and 22% or more on Cash Advances, notwithstanding that housing loan interest rates have fallen commensurately with falls in the Cash Rate.
Banks can borrow large amounts of cash at the RBA Cash Rate of 2% (as at 30 June '15), yet too many Credit Cards charge interest beyond any Interest Free Period up to -
* 20% on Purchases (often an Interest Free Period is enjoyed, but not always); and
* 22% on a Cash Advance from the date of the Cash Advance. Some charge an explicit fee to draw a Cash Advance.
The Financially Educated like the Writer make no meaningful contribution to the profits earned by Credit Card Issuers because both of his Credit Cards have no annual fee and he has periodical debits set up to automatically repay his Total Amount Owing each month. Yet he enjoy not less than 28 days and not more than 42 days Interest Free Period on Purchases which represents a no-cost Line Of Credit because many Financially Uneducated And Vulnerable Australians that Lack Financial Acumen are paying Usurious Unsecured Personal Loan Interest Rates.
Usurious Unsecured Personal Loan Interest Rates notes that -
(a) Unsecured Personal Loans explains that the Four Pillars offer variable rate unsecured personal loans for between $5,000 and up to at least $50,000 for up to 7 years at between 12.99% and 14.69% (plus a $150 'Establishment Fee' and a $10 'Monthly Service Fee') which equates to a total interest and fees cost for a NAB personal loan of approx 13%pa., referred to as the Comparison Rate, on the 'Outstanding Loan Owing' (not the 'Initial Loan Amount' for the term of the variable rate personal loan); and
(b) the cost of borrowing money using a Credit Card is often over 8% higher than if taking out an Unsecured Personal Loan if the 'Borrower' adheres to the published 'Repayment Schedule'. This 8% 'Premium' above the market rate for an Unsecured Personal Loan is unconscionable and represents a usury additional financial impost principally contributed by Financially Uneducated And Vulnerable Australians.
Australian Governments allocate $43 million annually to 44 Australian charities to provide financial counselling to Australians. In identifying a vehicle to source 'plaintiffs' and 'Credit Card Distress' Authorities, thousands of Financially Uneducated And Vulnerable Australians can readily be contacted by these 44 Australian charities that fund "....financial counsellors who provide free, confidential advice for people who are struggling to pay their bills."
This $43m annually budget expenditure provides evidence that our governments are aware that a section of the Australian population, ostensibly level 1 and level 2 Australians (identified by the Productivity Commission's Staff Working Paper "Links Between Literacy and Numeracy Skills and Labour Market Outcomes" dated Aug 2010 and the ) have an addiction to credit, and do not possess the skills to manage that credit. Alas, Australia's eminent parliamentary mandated regulator of the commercial banks, namely the RBA, does not identify that some Australians do not possess the literacy and numeracy skills necessary to not be deceived by many of the Credit Card Issuers advertising. Why? Because the RBA is conflicted, just as the Commonwealth Bank of Australia was conflicted prior to the Reserve Bank Act 1959 which -
(I) 'carved out' the central bank functions that previously the Commonwealth Bank of Australia held carriage; and
(II) entrusted those responsibility to the newly constituted Reserve Bank of Australia in order to administer them "at arm's length".
SMH Middle class hit by debt - Huge mortgage repayments and credit cards bills are taking their toll snapshots the problem that non-conflicted ‘Not-For-Profits’ (Salvation Army's Moneycare service Centacare, Anglicare, Lifeline, Wesley Mission's Credit Line, Smith Family, St Vincent de Paul's Budget and Financial Counselling Service, Centacare ‘et al’) deal with the damage when families become hopelessly credit cards indebted.
Humans suffer from a plethora of addictions where alcohol, hard drugs, nicotine, gambling, dishonesty, Compulsive Buying and Eating Disorders are standouts. Regulators ("watchdogs") responsible for some of these addictions have taken firm action to mitigate these addictions. The ICAC takes its responsibilities seriously particularly after the Fairfax Press or the ABC publically exposes fraud and deceit. Australia has first class federal and state police forces. Our health agencies are doing a lot to combat nicotine addiction with explicit health warnings on packaging and pursuing plain paper packaging. Alas, the alcohol industry has thwarted efforts to control abuse providing ridiculous 'opening hours' because 'money talks'. Does money also influence the RBA not to upset 'the gravy train'?
The RBA has failed many level 1 and level 2 Australians by abrogating its Statutory Duty and its Fiduciary Duty to reign in deceit and greed perpetrated by some Credit Card Issuers whereupon Financially Uneducated And Vulnerable Australians have suffered Numeracy And Literacy Discrimination by contributing a disproportionate share of Interest And Fees Revenue to Credit Card Issuers. Yet the RBA retains authority to regulate interest rates, fees and loyalty points. Until 1980 no bank could offer more than 3.75% on a passbook account due to RBA regulation - as noted in Overview of Financial Services Post-Deregulation.
Below is a quotation from Westpac's submission to the Wallis Inquiry, submitted by the then CEO, Bob Joss:
"Protection of consumers
On-going monitoring of credit card pricing in anticipation of a substantial inquiry into the effects on consumers of the deregulation of credit card interest rates"
The Writer's investigations suggest that the Wallis Inquiry did not adopt Westpac's prudent recommendation in either its Discussion Paper - Released Nov 1996 or Final Report - Released March 1997.
If you share the Writer's belief that the RBA's abrogation of its Parliamentary Bestowed Mandate has materially contributed to Eligible Plaintiffs, namely Financially Uneducated And Vulnerable Australians experiencing Extreme Financial And Emotional Distress who have each paid Material Interest And Fees (>$5,000) on Credit Cards over any continuous three year period, would you approach IMF Bentham or another litigation funder?
If need be, the Writer would be keen to approach GetUp to launch a campaign to raise funding for a 'class action'.
Eligible Plaintiffs can readily be sourced by 44 Australian charities to provide financial counselling.
If you do not share the Writer's belief that the RBA has abrogated of its Parliamentary Bestowed Mandate, and you are unable to identify negligence by either of APRA or ASIC, the Writer will approach Four Corners (presented corruption within CBA's financial planning division) to present the -
(a) magnitude of damage caused to Financially Uneducated And Vulnerable Australians by some Credit Card Issuers; and
(b) structure of inept, sometimes conflicted 'regulators' incapable of regulating the way the RBA 'iron fisted' Australia's commercial banks prior to 'financial deregulation' in the early 1980s, as a result of the Campbell Committee Inquiry into the Australian Financial System.
Yours sincerely