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Are the lending laws safe enough for consumers?

Thursday 20 May 2021

 
Choice Australia has highlighted Sydney and Melbourne hotspots as of mortgage stress. 

In an official statement this week, Choice Australia CEO Alan Kirkland said, “Safe lending laws were put in place to avoid the huge damage to families and communities caused by mortgage stress - by making banks take care to avoid giving people loans they won’t be able to afford to repay.”


This comes just after the political party One Nation backed out of the government plan to repeal responsible lending laws. 

 In March of this the year, an article published on the Choice website by Alice Richard draws connection between ‘irresponsible lending’ and the cause of the Global Financial Crisis (GFC) as well as the findings from the Royal Commission into Banking and the Financial Sector.   

Richard writes:
In 2009, the federal government implemented safe lending laws in response to the GFC, and many years of legal services highlighting the harm of bad lending practices. The laws require banks to ensure that people will not end up in significant hardship from a loan.

However, earlier this the week One Nation has backed out from supporting the government’s roll back of the responsible lending laws. 

Nick Bonyhady and Clancy Yeates writes in the Sydney Morning Herald that that One Nation Leader Pauline Hanson said that this move would leave Australians vulnerable to predatory banks. 

Kirkland added in his official statement, “If the Government gets away with its plan to axe safe lending laws people who are desperate to get into a rising housing market will be at risk of overexposure and people who need to refinance won’t be adequately protected.”