The global financial crisis revealed shocking scandals where banks irresponsibly lent people loans they knew they could never afford.
In 2009, the Federal Government passed important responsible lending laws that required banks to ensure that people will not end up in significant hardship from a loan. This places some of the onus on the banks to ensure that people are not being sold into unaffordable loans.
The government is proposing to wind back responsible lending laws. This means that people will have much weaker protections and banks will be allowed to sell unaffordable and expensive credit to people.
Debt relief charity Christians Against Poverty Australia has joined 124 other organisations, and 97 prominent Australians, urging senators to block the proposed termination of safe lending laws.
The national open letter, organised by consumer advocacy group CHOICE, brings together charities, academics, unions, financial counsellors and community, legal and family violence organisations in condemning the government’s proposal.
These laws were originally designed to protect ordinary people from the terrible lending practices Australia saw during the global financial crisis.
The letter argues that if these laws are axed the consequences could lead to a ‘debt disaster’, and outlines the change would directly contradict the very first recommendation of the banking royal commission.
Rosie Kendall, CEO of Christians Against Poverty Australia, says, “We are experiencing our first recession in nearly 30 years, and the church has a unique opportunity and responsibility to serve and love the poor now more than ever. I believe that signing this letter is an essential action we can all take to help protect people from exploitative lending by banks and other lenders. At CAP, we believe we have a ‘duty of care’ to protect the vulnerable from the destructive force of debt, focussing on Jesus’ mandate to truly care for the poor from policy to personal finance, we are hopeful that lives will be transformed and people will be free from debt.”
The Open Letter is also supported by new national polling that shows that Australians expect lenders to check if credit is unaffordable. 79% of people think that banks should be required to always check a customer’s ability to repay before offering a mortgage (only 4% disagree).
Alan Kirkland, CEO of CHOICE, says, “Without safe lending protections many Australians will be exposed to the terrible lending practices we saw in the lead-up to the global financial crisis. We’re asking every Senator to help protect us from this happening again. We have seen what happens when banks are unregulated, with no penalties for bad behaviour. That’s why we had to have a royal commission. Nobody wants to go back to those days.”___
 Polling was completed as part of the Dynata’s weekly “Omnipulse” omnibus. The fieldwork was conducted on 11-16 November, 2020. 1,014 people completed the survey and data was weighed to the latest ABS census data so results are nationally representative.