Aussies less likely to be ripped off after response to SACC inquiry

New laws will prevent vulnerable Aussies from being ripped off by dodgy lenders.

Aussies less likely to be ripped off after response to SACC inquiry

New small amount credit contract (SACC) laws will mean that struggling Aussies will no longer be charged up to 880 per cent interest on leases for basic household goods.

The Federal Government has accepted 21 of 24 recommendations that will help protect vulnerable consumers from unscrupulous financial institutions trying to rip them off.

"Implementation of these recommendations will ensure that vulnerable consumers are afforded appropriate levels of consumer protection while continuing to access SACCs and leases," said Kelly O'Dwyer.

The SACC review targeted payday lending and consumer rent-to-buy leasing practices.

Previous inquiries revealed that Australians were being ripped off, paying the highest lease prices for basic household goods, such as dryers and fridges.

One struggling Aussie was reported to be leasing a $345 dryer which, when charged an interest rate of 884 per cent, ended up costing $3040.

Because of the latest inquiry, a cap will be placed on total lease payments equal to the original price of the goods, plus 4 per cent of that price each month. There will also be a cap on lease payments equal to 10 per cent of a borrower’s income.

The Government will also apply new rules to lending practices, preventing borrowers from taking out small loans if they have previously defaulted on an earlier loan or already have two or more other loans. It will also seek to ban unsolicited offers of payday loans to help stop Australians from overcommitting.

The Consumer Action Law Centre welcomed the announcement, saying it was a "good start" in stopping payday lenders and rent-to-buy companies from ripping off vulnerable Australian families.

The Consumer Household Equipment Rental Providers Association is not happy with the decision, saying that half a million low-socio economic families could lose access to electrical goods due to the negative effect on the consumer leasing industry.

Read more at The Age.

What do you think about the new laws? Have you ever fallen afoul of unscrupulous lenders or payday loans?

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    COMMENTS

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    MICK
    29th Nov 2016
    10:50am
    Leon: sorry but 'laws' are generally not worth the paper they are written on and are frequently ignored and not enforced.
    We have 'No Dog' signs near us which are a waste of money because are deadbeat council refuses to enforce them despite large numbers of people disobeying them.
    We have laws to stop the misuse of residential homes but for a decade homes were turned into venues for parties with councils claiming they had 'no legislation'...the lie of convenience. The zoning was always THE LEGISLATION but councils preferred to look the other what so that their mates in the real estate industry could make mega profits out of doing what was illegal.
    The are laws to regulate telcos and force them to pay compensation when they cannibalise their customers. I was out of the country early this year when our phone and internet were cut off because if Optus negligence. It too 2 months of the most intense battle I have ever had to get the service reconnected. And then Optus claimed and MSD (Mass Service Disruption) to avoid compensation. I requested proof and they ignored that request as well. So what good was the legislation when no arm of government is prepared to enforce it?
    Sorry for the long winded response Leon but legislation is great ONLY as long as it is worth anything more than lip service. Sadly the public can go whistle because we have puppet regulators who refuse to do their job and governments in bed with big business not wanting to stir the pot. So the 'legislation' becomes another waste of our money to make it look like there are laws when in effect there are not.
    The pom
    29th Nov 2016
    11:20am
    should have addressed a long time ago. It doesn't affect me as a person because I have sufficient financial awareness and accounting ability to look after my family finances, but I had a period in my life when I had to try to help some of the victims from their own failures. I would spend a lot of time arranging their financial matters so that there was a possible glimmer of hope only to have the husband appear in my office with another stack of loan details for goods they didn't need at prices they could not afford.
    Anonymous
    29th Nov 2016
    11:56am
    Yes pom there are no laws that can be made or enforced to protect people from themselves.
    MICK
    29th Nov 2016
    12:52pm
    You can never protect people from themselves but laws need to be real laws, not pretend ones. As I proceed along the path of life I have seen again and again that many 'laws' are simply there as window dressing with no intention to enforce. So why bother? Just a case of making the troops feel like they are protected when the reality is completely the opposite.
    particolor
    29th Nov 2016
    12:19pm
    How about something to Protect Old Age Pensioners from Dodgy Governments !! :-( :-(
    MICK
    29th Nov 2016
    12:53pm
    A foreign tax haven maybe?
    particolor
    29th Nov 2016
    4:47pm
    My names Oldfellow Not Rockefeller :-(
    dougie
    29th Nov 2016
    1:44pm
    Sorry all of the so called providers of this type of rentals. Maybe people should be advised when they take out a Rental Contract against the cost of purchase on a Hire Purchase contract would be. What difference is there in the total cost of the two? At the end the purchaser has the property in Hire Purchase the Renter has nothing only a lot less money. Sounds like Waltons to me! At least give it a go and place the management under Fair Trading to carry out investigations and pass on cases of infringement for prosecution.
    The pom
    29th Nov 2016
    3:35pm
    There is as well as the registered lenders the absolute crooks who force loans on to weak individuals and then proceed to collect outrageous amounts of interest for ever and with the threat of violence hanging over the heads of anybody sucked into the net if they try to get out of the system. The threat of violence is forever held over these people. I do not know what the answer is to this.


    Tags: money, finance, debt, credit,

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