A consumer advocate has flagged that criminal penalties threatening brokers and lenders as part of the NCCP’s hardship provisions could be removed.
NSW Consumer Credit Legal Centre director Karen Cox told the ASIC Summer School in Sydney that the CCLC was against the inclusion of criminal penalties in the NCCP’s hardship provisions.
Cox indicated that the NSW CCLC has been vocal on the issue, and said the government was now considering amending the NCCP in regard to these criminal penalties.
“I’m pleased to say that they’re looking at addressing that in the latest round of amendments,” Cox said.
Cox said criminal penalties forming part of the provisions had not been a desired outcome among consumer advocacy groups.
“I’m not quite sure where they came from. Certainly, consumer advocates weren’t arguing for them. We don’t want to throw lenders in jail, [and] we don’t want to throw brokers in jail,” Cox said.
Cox suggested that including these criminal penalties could put lenders and brokers on the defensive, and actually disadvantage consumers. She indicated that the threat of criminal penalties did not necessarily create a more favourable environment for borrowers arguing for hardship variations.
“I think the criminal penalties have created a lot of unnecessary paranoia that doesn’t necessarily drive good outcomes,” she said.
Overall, Cox praised the NCCP hardship provisions, and said they had proven a useful tool for borrowers in stress.
“A whole lot of lenders have now been forced to comply with hardship who have never had to do it before, and they’re finding it very challenging, and they’re also finding dealing with the EDR schemes very challenging. We’re having some teething problems for some of the lenders not used to being subject to this regime, but when it works it works very well,” she said.
EDR schemes have formed the crux of the regime’s power, Cox said. While she said the CCLC would first recommend borrowers to seek help through a lender’s internal dispute resolution scheme, she commented that EDR schemes formed an additional “backstop” should IDR measures fail.
“The regime has helped enormously in that regard. The biggest impact for us in terms of dealing with hardship has been access to external dispute resolution,” Cox said.
Hardship complaints show no sign of easing