After the meeting, which Treasurer Josh Frydenberg attended, Denita Wawn, Managing Director of Master Builders Australia, said that in recent months some people eligible for the government HomeBuilder program have experienced long delays for the approval of loans and denial of credit from banks.
“We need to remove onerous aspects of our credit laws, while making sure that proper protections are in place,” she said.
“We believe this legislation does this and strongly support its passage to ensure that we have access to credit and a better return to business in 2021.”
“Necessary for recovery”
Australian Automotive Dealer Association chief executive James Voortman said new car sales had fallen to their lowest level in two and a half years and that the main problem identified by dealers was the difficulty for consumers to drive. ” access credit.
“The changes to responsible lending will help customers and dealer service companies better participate in the recovery this country desperately needs,” he said.
Mortgage and Finance Association of Australia chief executive Mike Felton said the 13,500 mortgage brokers he represented, who took out 60% of home loans, had all gone through red tape that kept them from getting better. take into account the individual circumstances of loan applicants.
“These reforms will result in a much more efficient credit market and clients will be screened on the basis of a risk-based assessment,” he said.
“This should reduce turnaround times and lenders will have a better understanding of their obligations.”
Housing Industry Association chief economist Tim Reardon said there were too many “braces and braces” limiting funding to homebuyers, including delays and hardship for first-time buyers. first-time buyers to obtain home loans.
“This is a very important first step in tackling these loan restrictions.”
The work remains firm
Mr. Frydenberg announced in september that responsible lending laws introduced by Labor in 2009 as a result of the GFC would be removed for banks to encourage the flow of loans and stimulate economic recovery after the COVID-19 recession.
The deregulation responds to concerns from banks and Reserve Bank of Australia Governor Philip Lowe that following the Hayne Royal Banking Commission and ASIC’s prosecution of Westpac in the “shiraz and wagyu ”, the banks had become too conservative and reduced the flow of credit.
The government is aiming to move from “attention to lenders” to the traditional “attention to borrowers”.
Banks and some non-bank lenders will be vetted under less prescriptive prudential lending standards currently overseen by the Australian Prudential Regulation Authority, while eliminating stricter responsible lending rules from the Australian Securities and Investments Commission.
ASIC’s oversight of payday lenders for vulnerable borrowers will be strengthened.
The government will face the challenge of passing the bill through the Senate because Labor, Greens and consumer groups oppose it.
The government would need the support of three of the other five interbank senators.
Josh Frydenberg has told Australians he will protect them from the commission-driven, greedy sales culture the Royal Banking Commission has exposed.
– Stephen Jones, Shadow Minister of Financial Services
Labor shadow minister for financial services Stephen Jones said Commissioner Kenneth Hayne had found responsible lending rules “critical” to protect consumers from predatory lending.
“It would be astounding if the Senate investigation into anti-consumer credit laws proposed by Josh Frydenberg contradicted the Hayne Royal Commission,” he said.
Josh Frydenberg told Australians he would protect them from the commission-driven, greedy sales culture that the Royal Banking Commission revealed.
“Labor will keep him on his promise to implement the Royal Commission recommendations, the first of which was to keep responsible lending obligations in place. “
The government, which does not want to appear to be helping the banks, did not invite bankers to the meeting.
“These measures do not concern the banks, these measures are there to help Australians … who have good credit risks and should be able to obtain this financing,” said Mr Sukkar.
Borrowers will be able to raise concerns and seek external dispute resolution through the Australian Financial Complaints Authority.
At the other end of the credit market, payday lenders and consumer leases face crackdown in response to a push from consumer advocates.
New rules will aim to protect welfare recipients by restricting payday loans (known as small credit contracts) and consumer leases for people who receive 50% or more of their net income from Centrelink.