Submission: Commonwealth Treasury consumer leases issues paper

Consumer Action has made a submission to the Commonwealth Treasury on regulation of consumer leases. The submission argues that the purpose of any reform of regulation of consumer leases should be to:

  • allow the National Credit Code to distinguish consumer leases from credit based on the substance of the arrangements rather than their form; and
  • remove incentives for businesses to structure credit contracts as leases by removing unnecessary differences in regulatory burden between the two (including in disclosure).

Recommends that the definition of ‘consumer lease’ in the National Credit Code should provide that:

  • a consumer lease cannot provide either a right or obligation to purchase;
  • a consumer lease must allow the consumer to return the goods being leased at any time without penalty; and
  • a contract where the intent of the parties (as determined by objective factors) is that the consumer will ultimately purchase the goods is a credit contract;

Supports amendments to the National Credit Code to require consumer lease providers to disclose:

  • cash value of goods;
  • amount paid in excess of cash value;
  • total cost of the lease;
  • a nominal interest rate; and
  • the cost of ancillary products and services in lease agreements and a financial summary table, noting that many consumers do not understand important features of existing credit disclosure arrangements;

In addition, we recommend that consumer lease providers should be required to disclose total cost of lease agreements in marketing material if that material provides other information on cost (such as a ‘per week’ cost).

To read our submission, click here: Commonwealth Treasury consumer leases issues paper.

 

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