The Senate Economics References Committee has published its Report on its inquiry into credit and financial services products targeted at Australians at risk of financial hardship.

After hearing evidence and considering submissions in relation to credit service providers not considered by the Financial Services Royal Commission such as payday lenders, consumer leases, and debt advice firms as well as buy now pay later products the Committee’s recommendations include:

Recommendation 2:  the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017 exposure draft released by Treasury be introduced, and passage facilitated by the government;

Recommendation 5:  Treasury should undertake a review to identify necessary reforms to regulatory arrangements for medium amount credit contract products;

Recommendation 6:  The government should implement Recommendation 1.7 of the Royal Commission removing the point of sale exemptions from the National Consumer Credit Protection Act 2009;

Recommendation 7:  the National Consumer Credit Protection Act 2009 be amended to contain strong anti-avoidance provisions that are capable of capturing both new, emergent credit-like products, and attempts to disguise the nature of existing credit products;

Recommendation 8:  the government implement a regulatory framework for all credit and debt management, repair and negotiation activities that are not currently licensed by the Australian Financial Security Authority;

Recommendation 9: the government considers, in consultation with the Australian Securities and Investments Commission, consumers and industry, what regulatory framework would be appropriate for the buy now pay later sector. This regulation should ensure that:
• before credit is extended, providers appropriately consider consumers’ personal financial situations;
• consumers have access to internal and external dispute resolution mechanisms;
• providers offer hardship provisions;
• products are affordable and offer value for money; and
• consumers are properly informed, prior to entering into agreements, about their terms and conditions;

Recommendation 11: the product intervention power currently proposed in the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 legislation be extended to cover buy now pay later products.