2005 Media Releases
December 15 , 2005
Report calls for new laws to deal with ‘reckless lending’
A report by La Trobe University Law students calls on the Victorian government to enact new legislation to deal with abuses in the provision of finance through credit cards.
The report – based on a study into the impact of the law and social policy on Victorian credit consumers – has been prepared by senior law student researchers in association with the West Heidelberg Community Legal Service.
It says it is ‘imperative that governments undertake a greater supervisory role. Tighter regulation in Victoria is essential. Vulnerable consumers should not be left to the mercy of those who profit from their inability to make ends meet. Legislation must be enacted to ensure that lending is “fair, safe and appropriate”.’
The report recommends that Victoria enacts legislation similar to the Responsible Credit Bill, now before the NSW Parliament, to deal with ‘the prevalent and expanding detriment to consumers’ that it says has arisen from ‘abuses in the provision of finance through credit cards’.
It highlights the issue of over-commitment in the community which stems from the use of credit, and claims that current legal provisions and their application ‘provide insufficient protection for consumers against reckless lending. This is predominantly the result of the fact that credit lenders are currently not required to assess the ability of their debtors to repay their debts with reference to their financial position at the time that an increase in credit is provided.’
The report also recommends greater regulatory control over the services offered by fringe credit providers, like payday lenders.
La Trobe University Law lecturer and Supervising Solicitor in Community Legal Education at the West Heidelberg Community Legal Service, Liz Curran, says student researchers, while on placement at the Legal Service, saw first-hand the impact on clients of financial hardship and reckless lending.
‘They want to suggest reforms to ensure better practices by lending bodies. This report provides some possible reform ideas and has been forwarded to government.’
The report was written by La Trobe Law students Donna Curnow, Natasha Jankovska, Susanna Kirpichnikov and Elizabeth McGrath, as part of their clinical placement at the West Heidelberg Community Legal Service.