Dear Australian MPs,
The federal government has announced plans to repeal safe lending laws – an essential consumer protection designed to protect ordinary people from the horrific credit practices we saw during the global financial crisis and the royal banking commission.
We urge you to stand up for the Australians and block this harmful law if it is brought into parliament.
People will be worse off. When people get loans or credit cards that they cannot afford, the human cost is high. The Royal Banking Commission heard shocking stories from banks providing 30-year mortgages to old retirees, relying on fraudulent loan documents from auto dealers, and paying thousands of kickbacks to loan “importers”. We’ll see more of this when banks and other lenders are not legally required to be cautious about lending.
This will lead to a debt disaster. We are emerging from our first recession in nearly 30 years and high household debt will slow the recovery of the national economy. Australia already has the second highest household debt in the world. Banks and other lenders should not get the go-ahead from the government to burden people with even more debt and keep households caught in a cycle of persistent debt.
This change would go against the very first recommendation of the Royal Banking Commission. Commissioner Kenneth Hayne called for safe lending laws to be enforced, not abolished.
We write to you as community organizations, financial advisors, and thousands of people concerned about the government’s disastrous proposal. These policies will harm people and hinder our economic recovery. These changes will take away people’s rights and give banks more power.
If this bill is passed, people will have to pick up the broken pieces in the years to come while banks and other lenders get blank checks to take advantage of aggressive lending. We need you to stand up for our community and protect safe lending laws.