Sector articles of interest - 17 September
Written on the 17 September 2020 by SAFCA
Letter from consumer organisations re Lenders Mortgage Insurance
Please see attached copy of a letter from four consumer organisations Consumer Credit Legal Service WA, Financial Rights Legal Centre, Consumer Action Law Centre and Financial Counselling Australia about QBE's use of an "Acknowledgement of Debt" form when people are facing a likely shortfall debt on the sale of a mortgaged property.
New analysis of inequality in Australia pre-COVID-19 provides a baseline against which to measure the impacts of the pandemic on income and wealth inequality. It highlights the ameliorating effects of timely Government policy responses including increased Jobseeker and Jobkeeper payments but warns that the long-term effect of the pandemic on income and wealth inequality will depend on how these policies evolve.
Using the latest available ABS data (2017-18), the ACOSS/UNSW Sydney Poverty and Inequality Partnership Report finds that, pre-COVID, the incomes of those in the highest 20% were 6 times higher than those in the lowest 20%, with that gap widening since 2015-16 (when the ratio was 1:5).
An examination of wealth data shows that, for the first time, average household wealth exceeded $1 million in 2017-18. However, the distribution of wealth in Australia was deeply unequal, with the average wealth of the top 20% ($3,255,000) some 90 times that of the lowest 20% ($36,000). Those in the lowest 10% held $8000 in average net wealth, and the bottom 5% held net debts of $5000.
The report also examines available data on the impacts of COVID 19 on employment and incomes to explore the likely impacts of the pandemic and associated lockdowns on inequality in Australia. It confirms that the pandemic has had a stark impact on those in lower paid jobs, with the average wage of people in the most affected industries half that of people in least affected industries even before the pandemic. The majority of those affected by deep income losses are women and young people.
The Federal Court of Australia has found that Rent 2 Own Cars Australia Pty Ltd (R2O Cars) failed to comply with the National Consumer Credit Protection Act 2009, including by charging some consumers an interest rate of more than 48% per annum when purchasing used cars.
R2O Cars provided credit for the purchase of used cars to customers including some vulnerable consumers. The court action covered 142 hire-to-purchase contracts entered into between 1 March and 6 September 2017 and 90 hire-to-purchase contracts entered into between 25 May and 18 June 2018.
On 11 September 2020, the Court declared:
In 140 contracts, R2O Cars had breached the price cap in the Credit Act by charging consumers an interest rate of more than 48% per annum, and in some instances up to 77% per annum; and
In 177 contracts R2O Cars had misled consumers by understating the cost of credit and by failing to calculate the interest rate as required by the Credit Act.
ASIC was also successful in obtaining injunctions restraining R2O Cars and the directors, Paul Green and Timothy Roberts from engaging in contraventions of the Credit Act and ASIC Act and engaging in a credit activity for a particular period.
ASIC Commissioner Sean Hughes said, 'R2O Cars engaged in misconduct by charging excessive interest and by misleading consumers about the true cost of the credit contract. ASIC considers it is important we act to deter this type of misconduct through Court action as well as protect consumers from predatory behaviour.'
The Court also declared that Paul Green and Timothy Roberts, were involved in some of the company's conduct which makes them personally liable for civil penalty orders. Mr Roberts did not contest ASIC's case or defend the proceedings at trial.
In his judgment, Justice Greenwood found that that Mr Green's conduct represented a person who failed to come to grips with the obligations imposed upon R2O Cars and did so with "eyes tightly closed", even when he was put on notice by ASIC of concerns about R2O Cars' compliance with the Credit Code.
The matter will be listed for a further hearing at a later date to determine the amount of the penalty and duration of the injunctions to be imposed on R2O Cars and the two directors.
Nominations for the 2020 Governor's Multicultural Awards are now open. These important awards recognise and celebrate outstanding South Australians who promote multiculturalism and increase the understanding of the benefits of cultural diversity in our community.
South Australians are encouraged to nominate an individual, team or organisation that is passionate about making a positive contribution to multiculturalism and intercultural understanding, and promoting our culturally-diverse state.
Nominations close 5pm, Friday 9 October. Visit this site for further information - click here
The COVID-19 pandemic has only magnified the challenges faced by waged poor households those living below the poverty line despite getting most of their income from salaries and wages. With increased underemployment likely to push a new cohort of households into waged poverty, it is ever more important that governments, the community services sector, and businesses working in the essential services understand and respond to the unique challenges faced by waged poor households.
The SACOSS Energy, Water and Telco Conference titled 'Working to Make Ends Meet' will be just the place to engage with these challenges. Livestreamed on Tuesday 24 November, 2020, our conference is aimed to address issues for Energy, Water and Telco companies, in concert with workers from the community services sector. The conference will discuss, analyse and seek to address how the rising cost of living, underemployment, low wage growth and inadequate income support means that being in paid employment is no longer a shield for keeping people out of poverty. We have created a program designed to investigate the key drivers of waged poverty, open discussions on how to address these and share in planning a more equitable future for all.
Register now for this year's thought-provoking conference (cost involved) - click here
GIVIT is free! We're here to help you do the best job you can as you support vulnerable people and communities in Australia. https://www.givit.org.au/
If you work for a charity, social service, school, community group, government or non-government organisation, you can apply to use GIVIT to help find the essentials that people you are working with need right now to improve their wellbeing and achieve better outcomes. https://www.givit.org.au/need-help/organisations