The Parliamentary Joint Committee on Corporations and Financial Services (PJC) has given financial planners some hope that it may recommend more than just token changes to the Future of Financial Advice (FOFA) bills by recommending key changes to legislation covering payday lenders.
In its report dealing with the payday lenders legislation – also handled by Assistant Treasurer Bill Shorten – the PJC recommended the Government revisit key aspects of the Bill, including the proposed cap on small amount credit contracts, which it said appeared to be unworkable.
The committee report was welcomed by the National Financial Services Federation (NFSF), which said that it was ready to work with the Government and other interested parties to formulate improved regulation of short-term lending following the PJC report.
However, a question mark now hangs over whether the Government will act on the recommendations of the PJC and amend its legislation.
Its actions in respect to the PJC recommendations are expected to provide a pointer to how it will react to any of the committee’s recommendations on FOFA.
"After detailed and thoughtful analysis of the issue, the Committee has concluded that there needs to be the right balance between protecting vulnerable Australians and maintaining a viable industry," NFSF chairman, Mark Redmond said.
He said that, in particular, the Committee had noted: "The proposed 10 and 2 per cent cap does not appear to be workable. In this regard, it does not appear that an appropriate balance has been struck between consumer protection and industry viability."
"Since the Government unveiled its proposed regulatory changes in August, thousands of Australians have expressed their concern about the changes, and their support for a viable short-term lending industry to ensure that access to this form of finance is maintained," Redmond said.
"While some vocal and out-of-touch consumer groups have demanded that all Australians lose access to this form of finance, the NFSF welcomes the Committee’s finding that short-term lenders are a necessary part of Australia’s financial system," he said.
