Banks’ actions run counter to intent of consumer credit law
The Finance Sector Union (FSU) has had reports that certain banks have increased sales targets following the introduction of the new consumer credit laws, which the FSU stated ran contrary to its intention of encouraging responsible lending.
The new consumer credit laws came into effect last week across all major banks and credit unions. The FSU stated that the new National Consumer Credit Protection Package required lenders to ensure that credit and credit products were not unsuitable for customers by undertaking a thorough review of the customer’s expenses and capacity to repay, and requiring greater disclosure.
However, the FSU stated that there had been varying reports about what effect the new laws would have on bank employees, as some union members reported having had no new training or procedures while others experienced major overhauls in credit policy requiring greater interview and assessment time. The FSU also noted that there have been reports of an increase in sales targets at some banks, which the union stated was “something that would seem to run counter to spirit of the law that seeks to put customers’ interests first, not the bank’s bottom line”.
The FSU stated that while it was supportive of the new laws, they should take into consideration the need to change management practices entrenched in banks and finance companies that conflicted with the broader intent of the new laws. Providing employees with access to genuine training, qualification and accreditation; providing more resources where they were needed; and removing conflicted remuneration models based on sales targets were some of the steps that needed to be taken, the FSU stated.
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