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Financial Sector Reform Bill 2022 Passed

Friday 2 December 2022

This week saw the passage of the promised Financial Sector Reform Bill 2022.

Assistant Treasurer and Minister of Financial Services Stephen Jones said during the second reading of the bill, "The Financial Sector Reform Bill 2022 is part of a package of bills that finalises a number of remaining recommendations from the banking royal commission. It also delivers on the government's commitment to ensure safe and well-regulated consumer markets for credit products, such as small amount credit contracts—also known as payday loans—and consumer leases.”

The National Australia Bank in a formal statement embraced the passage of the bill saying This reform is a crucial step in protecting Australians from predatory lenders. It is often in desperate times that people access payday loans as a ‘quick-fix’ to make ends meet, without knowing the hidden costs involved.”

NAB continued, "These debts can often spiral, leading to more long-term debt. It is important regulations are in place to stop this happening.”
Laws need to be reviewed: Cigno
Earlier this year, the Australian Securities and Investments Commission (ASIC) won the appeal against Cigno and BHF earlier this year.

Concerning the successful  appeal the regulator said in an official statement at the time, “In making its decision, the Court found that legislation must be looked at in a way which ‘looks to the substance of the credit arrangements rather than their contractual form and ensures that the remedial provisions of the Code are not easily avoided by carefully structured credit arrangements.’”

ASIC Commissioner Sean Hughes said at the time, “ASIC expects companies to be candid about their credit arrangements. Credit regulation exists to protect consumers from unscrupulous and unfair lending practices and companies should not seek to bypass important consumer protections through artificial structures and mechanisms which expose consumers to additional harm and avoidable cost.”

The successful appeal against Cigno was raised at the recent ASIC forum as an example of the securities regulator's enforcement priorities.

At ASIC Forum ASIC Deputy Cahir Sarah Court said “We have continued our enforcement action in relation to Cigno, and successfully appealed to the Full Federal Court that a ‘financial supply fee’ charged by Cigno was in actual fact an unlawful charge made for providing credit. That matter is now subject to a Special Leave Application to the High Court that we will vigorously defend.”