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Credit card concerns top SA finance complaints

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South Australians made almost 1800 complaints to the independent financial complaints authority on credit products in just over two years, with a rise expected in “predatory lending” if safe lending laws are wound back, warns a national consumer group.

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Figures released by Choice on Tuesday showed there were 1791 credit product complaints made to the Australian Financial Complaints Authority (AFCA) from across South Australia between November 2018 and December 2020.

The national consumer group said more than 300 complaints were made from people in Adelaide CBD and the north eastern suburbs, while the fewest complaints – 75 – came from the south eastern suburbs of Hallett Cove, Sheidow Park and O’Halloran Hill.

Across the State, South Australians made 181 credit card complaints in the seven months from November 2018 and a further 305 complaints between July 2019 and June 2020.

Between June and December 2020, 111 complaints were made about credit cards in South Australia while consumer loans accounted for 91 complaints and life insurance 33.

AFCA said it considered a range of credit, loan and finance complaints, including the “level of an overdrawn fee or interest rate increase,” in its data but it was unable to consider a number of other consumer concerns, such as incorrectly calculated and applied fees or charges.

Choice said while personal loans and mortgages were in the top five most complained about financial products, credit cards were the top cause for concern.

“Complaints range from inappropriate lending, unfair fess and changes and poor disclosure,” a spokesperson said.

“With the combination of interest-free periods, compounding interest rates, and balance transfers, credit cards are extremely complex financial products.

“We are extremely worried that if the Government rolls back safe lending laws, there will be a spike in complaints as lenders are able to unfairly sell credit cards to people.”

The data comes as the Senate committee prepares to vote on proposed changes to roll back safe lending laws later this week.

Choice is among a raft of consumer advocacy groups, unions, financial councillors and law centres that have condemned the amendments, which largely focus on removing responsible lending obligations with the exception of small amount credit contracts and consumer leases.

The Federal Government has previously said the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 aims to reduce the time individuals and small businesses have to wait to access credit, improve competition and to streamline lending regulations.

Announcing the changes in September, Treasurer Josh Frydenberg said “simplifying access to credit for consumers and small business” was part of the Morrison Government’s economic recovery plan.

“Credit is the lifeblood of the Australian economy, with billions of dollars in new credit extended to households and businesses in Australia each month,” he said.

“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can continue to spend and businesses can invest and create jobs.”

But Choice said the proposal “flies in the face of findings of the Banking Royal Commission, which did not recommend any changes to responsible lending laws”.

The final Banking Royal Commission report, which was released in February 2019, found a number of failings and misconduct in Australia’s financial services industry and made 76 recommendations and 24 referrals for further action in the sector, including stricter breach reporting and waiting periods.

Choice CEO Alan Kirkland said axing the safe lending laws would be “unwise and irresponsible” in the current economic conditions.

He said he also expected to see a hike in “predatory lending in South Australia” if the laws were amended, placing South Australia’s “once famed affordability” at risk.

“Record-low interest rates, rising house prices, high unemployment and record lending in South Australia are adding more risks to the South Australian economy,” he said.

“The federal government’s plans to axe safe lending laws will only add more fuel to the fire.”

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