Consumer Credit Law Changes
New Consumer Credit laws in effect for all ADIs
Australia’s new Consumer Credit Laws have come into effect this week across all major banks and credit unions, signalling the commencement of a new era of responsible lending. But will the impact on employees be recognised?
The new National Consumer Credit Protection Package (NCCP) requires lenders to ensure that credit and credit products are not unsuitable for customers, undertaking a more thorough review of the customer’s expenses and capacity to repay and requiring greater disclosure.
By and large the industry has welcomed the new laws recognising the value to consumers and the industry’s reputation of enshrining responsible lending in law and acknowledging the likely benefits arising from some of the fringe and less credible lenders exiting the market as a result.
There are varying reports from some of the bigger banks about what the cost and impact of implementing the changes will be. These range from an assertion by the Commonwealth Bank that the implementation costs have come with a price tag of $40 million, while others, such as ANZ, have suggested a much lower figure.
But what does it mean for members?
Again there are varying reports on what the NCCP impact has been or will be on employees. Stories to date have ranged from there having been no new training or procedures required, to major overhauls in credit policy requiring greater interview and assessment time.
Not surprisingly, there have also been reports to FSU about sales targets actually being increased in some banks, something that would seem to run counter to spirit of the law that seeks to put customer’s interests first, not the banks bottom line.
Tell us your story – what, if anything, has changed in your job with the introduction of the new Consumer Credit Laws? Have your targets been adjusted? Have you been provided with training to comply with the new laws? Have your procedures changed? Has your workplace received more staff to cope with the changes?
FSU is supportive of the new laws and has long argued the need for responsible lending to be adopted across the industry. But the changes must take into consideration the need to change management practices entrenched in banks and finance companies that conflict with the broader intent of the new laws.
This includes providing employees with access to genuine training, qualification and accreditation, providing more resources where they are needed and removing conflicted remuneration models, based on sales targets, so heavily ingrained into the provision of credit in our banks and finance companies.
These are the next challenges that FSU will be discussing over coming weeks with government, regulators, employers and, most importantly, you, the members of the union and the people putting the new laws into practice.
There is a growing emphasis by finance industry management on tying remuneration outcomes, even minimum pay adjustments, to sales targets in a community that is swimming in debt and facing rising interest rates.
FSU has launched a Debt Stress campaign to highlight one of the major negatives members have about their jobs, the pressure to meet sales targets.
FSU is highlighting members desire to provide professional services to the community, something that is compromised by management’s persistent demand for sales volumes.
Finance Sector Union - Charter of Responsible Lending - Adopted by NEX
Debt Stress Report (1MB PDF)
Debt Stress Q & A
Debt Stress information flyer & sample letters