Senate Committee to inquire into credit & financial services targeting 'at risk'​ Australians

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By Darren James, Partner

A 5 minute read detailing what you need to know about the latest inquiry into financial services announced by the Australian Federal Government.

Background

The Australian Federal Government recently announced that the Senate Economics References Committee will inquire into credit and financial services targeted at persons at risk of financial hardship.

Here’s what you need to know.

Who will the Committee inquire into?

The Committee will investigate and inquire into the operations of credit and financial services providers who target their services at Australians at risk of financial hardship.

It will focus particularly, but not exclusively, on:

  1. payday lenders
  2. consumer lease providers (including rent-to-buy)
  3. unlicensed financial service providers (including ‘buy now, pay later’ providers)
  4. short term credit providers
  5. debt management firms
  6. debt negotiators
  7. credit repair agencies, and
  8. personal budgeting services.

If you’re a service provider operating within one of these spaces, you should already have started considering what your involvement in the Committee’s inquiry might be.

What will the focus of the Committee’s inquiry be?

The Committee has been tasked with examining three specific areas:

  1. impact: the impact of these service providers have on individuals, communities and the broader financial system.
  2. regulation: whether the current regulation of these service providers meets “community standards and expectations”, and
  3. reform: whether reform is needed to address harm being caused to consumers.

It is critical that the backdrop for the analysis of each of these areas will be Australians “at risk of financial hardship”.

This strongly suggests that the inquiry will involve, among other things, hearing accounts from consumers who are in financial hardship of their dealings with relevant service providers and how those dealings impacted upon them.

While there are no doubt countless examples of consumers who have had positive experiences with industry participants who operate in this sector of the market, the fact that the concept of persons at risk of financial hardship sits at the heart of the Committee’s terms of reference, means that this will be a critical area of focus by the Committee in its inquiry.

Sound familiar? It should. This is precisely the method the Hayne Royal Commission into Misconduct in Banking, Insurance, Superannuation and Financial Services examined the issues it was tasked with looking at.

When will the Committee’s inquiry start?

The Committee has already started accepting submissions from individuals and organisations.

The Committee is required to report by 22 February 2018.

Unless that deadline is extended, it is expected that the Committee’s work will ramp up shortly.

How the Committee will conduct it inquiry

It is customary for the Committee write to consumers, multiple industry participants and interested NGOs, and invite them each to make written submissions on specific issues or questions relevant to the Committee’s inquiry.

Once that has happened, the Committee will seek further submissions and, where appropriate, in order to give procedural fairness, an opportunity to address matters raised about you in other submissions received (especially where those matters are potentially adverse to you).

The Committee may also request that:

  1. documents be produced for the Committee’s inspection and review, and
  2. persons attend a public hearing to give oral evidence about matters to the Committee.

What to do if you receive a request from the Committee

If you receive a request from the Committee, take it very seriously. Get legal advice straight away.

There are important legal and other matters that you need to know about when responding to a Commission request – whether it be to make submissions, answer questions on notice, produce documents, or to give oral evidence at a hearing.

The Committee’s inquiry, and the rights of those involved in it, are governed by a complex variety of legislative instruments, standing orders, legal rights and obligations.

There are a wide range of issues that commonly come up when you get involved in a Committee inquiry. These include confidentiality, privacy, legal privilege, privilege against self-incrimination, parliamentary privilege and procedural fairness.

There are also criminal offences punishable by fine or imprisonment that you need to know about.

The Committee’s processes are public. It is not uncommon for them to attract significant media attention.

Most documents and submissions received by the Committee are published on the Committee’s website. Committee hearings are public and are also broadcast on the internet. Transcripts of those hearings are later made available on the internet.

If you receive a request from the Committee, take it very seriously.

If you are an industry participant and you receive a request to make submissions, produce documents or to give evidence at a Committee hearing – get legal advice quickly.

Hearings before the Committee are likely to take place in November or December 2018 and may extend into January 2019.

A timetable for the conduct of the Committee’s hearings is yet to be published.

This article is of a general, informational nature. It does not constitute legal or professional advice by the author or by Mills Oakley, and must not be relied on as such. 

For further information, please do not hesitate to contact us.

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