Care Financial Counseling Center ACT slams plan to reduce loan restrictions | Canberra weather


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Care Financial Counseling Center ACT has criticized the Australian government’s plan to remove essential protections for women victims of economic violence. The federal government has proposed a series of changes to cut red tape for lenders as part of its economic stimulus package. Lenders are currently required to undertake an appraisal process which will often alert them when loans should not be approved. Red flags, including a woman’s signing on the loan while her partner speaks, or the applicant’s lack of financial stability, should be considered before approval is granted. Financial abuse is legally recognized in ACT as a form of domestic violence, and the failure of lenders to perform necessary checks has been used in the past to challenge the validity of a loan. Care Financial chief executive Carmel Franklin said removing these laws would reduce the ability of lawyers like financial advisers and community lawyers to help survivors with debts they have accumulated during abusive relationships. Financial advisor Rosie Fisk said she recently helped a young woman whose ex-partner threatened to hurt herself if she didn’t help her get a loan for a car. “She was very young at the time – around 18. She applied for the loan and was surprised to get it,” Ms. Fisk said. The couple broke up soon after and the woman was left with growing debt and no vehicles after the departure of her former partner. “She continued to pay the loan for a few years until it got to the point where she could no longer afford to pay it,” Ms. Fisk said. When the financial advisory center requested documentation of the approval process, it found that the proper checks had not been performed. “Since she was coerced into taking out a loan and did not derive any benefit from it, we were able to argue on her behalf that this loan did not meet the requirements for responsible lending and the bank waived the debt. “she said. “Otherwise she would have been struggling with this debt for many years and also a lot of interest.” If passed, the amendment would be part of a series of changes to Australia’s consumer credit framework contained in the National Consumer Credit Protection Act 2009, aimed at reducing the time it takes for individuals and small businesses to access to credit. The reforms would give lenders more flexibility to make decisions based on “borrower characteristics” and type of credit, according to the Treasury. If a law were passed, the change would take effect on March 1. “This will ensure that barriers to accessing credit are removed so that consumers can keep spending and businesses can invest and create jobs,” the Treasury said. Ms Fisk said financial abuse can happen to anyone and it can be quite difficult to recognize. “It is often hidden and understated and a lot of people find it difficult to see that they are in an abusive relationship,” she said. “Responsible lending laws help protect those affected by financial abuse. It is essential to reduce the impact of financial abuse in our community that we uphold these responsible lending laws. “

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