Commissioner Kenneth Hayne’s final report recommended abolishing the ‘point-of-sale exemption’ in the National Consumer Credit Protection Act, making retailers legally liable for responsible lending on financing deals.
Currently, jewellery retailers are able to offer repayment plans and up-front financing, including interest-free deals, in store. External lenders are responsible for issuing and approving customers’ applications, with the retailer having no legal obligations to ensure the customer can afford the loan.
If adopted, the change would see retailers forced to apply for a credit licence, the cost of which begins at $2,055 for non-individuals. This licence must be renewed each year, which is free, but late applications and postal applications incur financial penalties.
Additionally, staff would need to be specifically trained in responsible lending, and businesses would have to pay to join the external dispute resolution scheme and take on financial insurance.
Russell Zimmermann, executive director of the Australian Retailers Association, called the recommendation a “rude shock”, adding that consumers will “have to bear” the new costs to businesses if the law is changed.
While the Government has theoretically backed removing the exemption, it said in an official statement: “[The Government] will carefully consider how these reforms are implemented to ensure balance is achieved between consumer protection and access to products and services."