Fringe lending practices
|Q.17 Part 2 of the Discussion Paper has highlighted concerns that have been raised in relation to fringe lending practices and noted various initiatives that are underway, or proposed that should have a deterrent effect on undesirable fringe lending practices. Your views are sought on: |
Responses to this section were generally brief, expressing support for initiatives aimed at fringe lending. Many submitters did not comment on this section.
Lenders noted the problems at the fringe end of the market and supported initiatives to reduce their impact on consumers. Banks made a point to ask that any policy to prevent fringe lending practices should not place impositions on the wider lending community.
One bank and another lender commented that they did not support the introduction of interest rate caps. Of the consumer representatives submissions that expressed their thoughts, most were in support of their introduction or further consideration of their worth. One group suggested that fees should be ‘justified' by lenders to allow scrutiny.
Some expressed support for the concept of responsible lending and the introduction of unfair contract terms. Support for the implementation of the Financial Service Providers (Registration and Dispute Resolution) Act was also expressed.
Some lenders noted their support for more comprehensive credit reporting believing it would allow more mainstream lenders to better assess applications for credit. Two credit reporting companies made submissions promoting credit reporting.
One submission recommended entering the CCCFA to cover small business transactions and providing for close alignment with Australian credit law.