With restrictions relaxed, more and more people desperate to pay their debts will dig themselves into even deeper holes, writes adele_ferguson. | OPINION auspol lending bank banks
It was pitched as an “adrenalin shot into the economy” but the Morrison Government’s decision to trash responsible lending laws will inevitably result in a return to the bad old days of loose credit and a debt binge.
The underlying assumption is the banks will do the right thing and the regulators will be waiting in the wings if they’re not. Good luck with that.At the heart of the backflip, led by Treasurer Josh Frydenberg, is the ideology of caveat emptor or buyer beware. It is the belief that light tough regulation works best and that banks and non-banks will do the right thing, leaving the onus on customers to make sure that they do.
Little wonder bank shares opened higher on the ASX. Not only will the easing boost credit growth, it will reduce costs due to less details required on expenses and income. Since the royal commission was announced there has been a lot of talk about the responsible lending pendulum swinging too far and spooking the banks into adhering to the letter of the responsible lending laws.
Westpac tried to take Flanagan’s home after her daughter got into trouble but thanks to Legal Aid stepping in to help her, she managed to stave off what could have been devastating. Now the restrictions have been releaxed, more and more people desperate to pay their debts, will dig themselves into even deeper holes.
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