This bill became law on Dec 12th, 2022.
Budget, tax & economy
Payday lenders cannot offer a small loan if the repayments would break affordability rules set in regulations, which lets the rules cap repayments as a share of a borrower’s income.
Predatory payday lending and rent-to-buy leases left borrowers exposed to unaffordable repayments, back-loaded fees and repeated loan marketing, problems highlighted after the Financial Services Royal CommissionThe inquiry behind some measures originally included in the package, including financial accountability and last-resort compensation work, but not the payday loan and consumer lease reforms.. The bill tightens these products by capping unaffordable payments, requiring simpler repayments, banning some unsolicited offers and stopping overcharging after early payout.
The bill was introduced as a mixed financial sector package: some measures dealt with remaining banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms. work, while the payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. reforms came from the separate 2016 small amount credit contractThe legal category for payday-style loans that the bill and explanatory material keep referring to when describing the consumer credit reforms. review. Senate amendments later removed the Financial Accountability RegimeSeparate rules for holding senior people in banks, insurers and superannuation firms personally responsible for breaches. The related schedules were removed from this bill before enactment. and Compensation Scheme of Last ResortA backstop scheme for unpaid AFCA compensation determinations. It was proposed in this package but removed from this bill before final passage. schedules, so the Act that received Royal AssentThe final step that turns a passed bill into an Act of Parliament. focused on the consumer credit reforms.
The main criticism was that the bill’s tighter consumer credit rules could restrict access to responsible small loans and have knock-on effects for borrowers and small businesses if the settings were too blunt. That concern was raised cautiously by Coalition speakers who still let the bill proceed, while some consumer and Greens voices argued a different part of the package, the accountability regime, was still not tough enough on executives.
Stephen Jones MP introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 12 Dec 2022
Final passage
Passed without a counted vote
Members called out ‘aye’ or ‘no’ — no individual votes were recorded.
Passage speed
95 days
From introduction to the latest recorded parliamentary step
Meaning
Payday lenders cannot offer a small loan if the repayments would break affordability rules set in regulations, which lets the rules cap repayments as a share of a borrower’s income.
Payday loans must generally use equal repayments at equal intervals, stopping lenders from back-loading costs or setting uneven payment timing.
Payday lenders are banned from sending unsolicited offers or invitations for a small loan to many people with current or past payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. links.
People who pay off a payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. early cannot be charged monthly fees for months after the loan has already ended.
Rent-to-buy style household goods leases cannot be offered if the payments break affordability rules, and consumers who were charged too much can avoid amounts above the goods’ base price.
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if the repayments that would be required under the contract would not meet the requirements prescribed by the regulations.Financial Sector Reform as-passed bill text
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if any of the following applies:Financial Sector Reform as-passed bill text
(1) A licensee must not make, or arrange for the making of, an unsolicited communication to a consumer (whether orally, in writing or by electronic means) that contains:Financial Sector Reform as-passed bill text
(1) A credit provider must not require or accept payment by the debtor under a small amount credit contract of an unexpired monthly fee.Financial Sector Reform as-passed bill text
(3) If the licensee enters into a consumer lease for household goods in contravention of subsection (1), then:Financial Sector Reform as-passed bill text
Context
The bill was introduced as a mixed financial sector package: some measures dealt with remaining banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms. work, while the payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. reforms came from the separate 2016 small amount credit contractThe legal category for payday-style loans that the bill and explanatory material keep referring to when describing the consumer credit reforms. review. Senate amendments later removed the Financial Accountability RegimeSeparate rules for holding senior people in banks, insurers and superannuation firms personally responsible for breaches. The related schedules were removed from this bill before enactment. and Compensation Scheme of Last ResortA backstop scheme for unpaid AFCA compensation determinations. It was proposed in this package but removed from this bill before final passage. schedules, so the Act that received Royal AssentThe final step that turns a passed bill into an Act of Parliament. focused on the consumer credit reforms.
Small amount credit review sets out consumer credit reforms
The payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. measures came from the 2016 Small Amount Credit ContractThe legal category for payday-style loans that the bill and explanatory material keep referring to when describing the consumer credit reforms. review, not from the banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms..
Explanatory memorandum ↗Government promises a full royal commission response within two years
The banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms. response was a separate stream behind the accountability and compensation measures originally included in the package.
Hansard ↗Government introduces a mixed financial sector package
The minister introduced a bill that combined remaining royal commission work with separate consumer credit reforms for payday loans and consumer leases.
Hansard ↗House passes the bill
House debate framed the small-amount credit and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. changes as protection for vulnerable consumers from predatory business practices before the bill cleared the chamber.
Parliamentary timeline ↗Parliament passes the amended bill
After Senate amendments removed the financial accountability and compensation scheme schedules, both houses agreed on the same text.
Parliamentary timeline ↗Financial Sector Reform Act receives Royal AssentThe final step that turns a passed bill into an Act of Parliament.
Royal AssentThe final step that turns a passed bill into an Act of Parliament. turned the amended bill into law, with the final Act focused on payday lending and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. reforms.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber. Later message exchanges with the other chamber were still recorded afterwards.
Third reading agreed to
Referred to Committee (28/09/2022): Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
APH bill page notesThe bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber considered amendments before the bill moved to the next stage.
Third reading agreed to :
The bill reached this recorded parliamentary step.
The House dealt with Senate amendments or requests so both chambers could settle the bill in the same form.
Consideration of Senate message
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal AssentThe final step that turns a passed bill into an Act of Parliament., turning the bill into an Act.
Key criticism
The main criticism was that the bill’s tighter consumer credit rules could restrict access to responsible small loans and have knock-on effects for borrowers and small businesses if the settings were too blunt. That concern was raised cautiously by Coalition speakers who still let the bill proceed, while some consumer and Greens voices argued a different part of the package, the accountability regime, was still not tough enough on executives.
No party represented in the debate opposed the bill, but support was partly conditional and some sanctions were criticised as too weak.
Risk of cutting off access to credit
Critics warned the new affordability and lending rules for payday loans and consumer leases could make it harder for people and small businesses to access lawful, responsible credit if the regulations were set too tightly. The concern was about implementation and market effects rather than the goal of stopping predatory lending.
Accountability penalties may be too weak
Some critics said the Financial Accountability RegimeSeparate rules for holding senior people in banks, insurers and superannuation firms personally responsible for breaches. The related schedules were removed from this bill before enactment. in the bill did not go farSeparate rules for holding senior people in banks, insurers and superannuation firms personally responsible for breaches. The related schedules were removed from this bill before enactment. enough because it lacked strong enough personal penalties for senior banking executives who breach their duties. They argued the regime risked being too soft unless tougher sanctions, including individual fines, were restored.
Further sources
Votes
The bill passed both chambers on the voices, so there is no list of individual Aye and No votes for final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Amendments grouped by chamber. Where APH reports aggregate counts, the package card summarizes the matching public amendment sheets by source theme.
House
The House agreed to the amendments made by the Senate, so the bill could pass both chambers in the same form.
Carried on voices
The chamber decided this amendment without a counted division, so there is no list of individual Aye and No votes.
Senate
The Senate agreed to the Government amendments on sheets PM145 and PM146, which removed the FARSeparate rules for holding senior people in banks, insurers and superannuation firms personally responsible for breaches. The related schedules were removed from this bill before enactment. provisions and the CSLRA backstop scheme for unpaid AFCA compensation determinations. It was proposed in this package but removed from this bill before final passage. provisions.
Carried on voices
The chamber decided this amendment without a counted division, so there is no list of individual Aye and No votes.
Government amendments remove the Financial Accountability Regime provisions and the financial services compensation scheme of last resort, stripping related title wording, table items, and Schedules 1 to 3.
Passed on the voices
The chamber agreed to this amendment package without a counted vote. APH records the agreed count by amendment, while the source documents are grouped into amendment sheets.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill and says it combines remaining banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms. work with separate, long-overdue protections for payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. customers.
Read in Hansard ↗James Stevens supports the bill and says it is a sensible way to implement Hayne royal commission reforms, strengthen oversight of the financial sector, and protect vulnerable Australians from misconduct.
Read in Hansard ↗Kate Chaney offers conditional or mixed support, arguing that i want to tell the parliament about the impact of buy-now pay-later on people in Perth who have sought support from financial counsellors.
Read in Hansard ↗McAllister supports the bill and says it delivers overdue reforms from the Banking Royal CommissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms., along with new protections for small credit contracts and consumer leases.
Read in Hansard ↗All speeches by bloc
3 speakers · 4 contributions · 3 support
“Nevertheless, I hope that we will secure the Parliament and the Opposition's support to the sensible measures I am introducing today. Schedules 1 and 2 to the Bill make minor and consequential amendments to various Commonwealth laws to support the Financial Accountability Regime and provide transitional arrangements relating to the repeal of the Banking Executive Accountability Regime (BEAR).”Read the full speech in Hansard ↗
“This package of bills implements a range of measures to reform this sector: firstly, the establishment of an accountability regime for financial sector companies, as recommended by the banking royal commission; secondly, the establishment of a compensation scheme of last resort for victims of financial misconduct, which was also recommended by the banking royal commission; and, thirdly, the implementation of the government's response to the long-outstanding SACC review. The previous government introduced but never passed legislation that responded to some recommendations of the SACC review. The consumer protections in this legislation go further than those proposed by the previous government.”Read the full speech in Hansard ↗
Hansard records 2 separate contributions by Stephen Jones on this bill. They are grouped here so the speaker is listed once.
Minister's second reading speech
Stephen Jones supports the bill and says it combines remaining banking royal commissionA shorthand used on the page for the Financial Services Royal Commission, separate from the 2016 review behind the payday loan and consumer lease reforms. work with separate, long-overdue protections for payday loanA small, short-term loan that the bill treats as high-risk because fees and repayments can quickly become unaffordable. and consumer leaseA rent-to-buy style contract for household goods, which the bill targets when repayments would be too high. customers. He also argues it is a sensible package that the opposition should back, while criticising the previous government for failing to act.
“Nevertheless, I hope that we are able to secure the parliament's and the opposition's support to make the sensible measures that I am introducing today. Schedules 1 and 2 to the bill make minor and consequential amendments to various Commonwealth laws to support the Financial Accountability Regime and to provide transitional arrangements relating to the repeal of the Banking Executive Accountability Regime (BEAR).”Read this contribution in Hansard ↗
Second reading speech
Stephen Jones supports the Financial Sector Reform Bill 2022The bill that, as enacted after Senate amendments, changed payday lending and consumer lease rules. Earlier financial accountability and compensation scheme provisions were removed before final passage. and says it will strengthen consumer protections in credit markets while backing the broader reforms to financial accountability and compensation. He argues the package will better protect vulnerable consumers and improve how financial institutions are held to account.
“The government is committed to ensuring providers do not take advantage of financially vulnerable consumers. Once again, I thank all members for their contribution to this debate and I commend the bills to the House.”Read this contribution in Hansard ↗
3 speakers · 2 support · 1 mixed
“This is really a part of that process to put in place recommendations where there's legislation required. Without completely recapping the remarks I've already given, I think that in each of the cases that are addressed we are going to see a good outcome for the people of this country and the protection of them from exploitation.”Read the full speech in Hansard ↗
“So whilst we won't deny the bill a second reading, it is important that the parliament assess and monitor the impacts of this change on consumers. Subject to those caveats, we commend the bill to the House.”Read the full speech in Hansard ↗
“I'm pleased to see the measures in this bill and I hope that, through this continuous process of improving the regulation in the financial services sector, we see a sector that is better run and more focused on the needs of consumers in our society and in our community.”Read the full speech in Hansard ↗
1 speaker · 1 mixed
“I want to tell the parliament about the impact of buy-now pay-later on people in Perth who have sought support from financial counsellors.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Senate · Amendments considered
Amendment packages agreed
The chamber considered amendments before the bill moved to the next stage.
House · Message from Senate reported
Message from Senate reported
The bill reached this recorded parliamentary step.
House · Consideration of Senate message
House agreed to Senate amendments
The House dealt with Senate amendments or requests so both chambers could settle the bill in the same form.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal AssentThe final step that turns a passed bill into an Act of Parliament., turning the bill into an Act.
Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
Referred to Committee (28 Sept 2022): Senate Economics Legislation Committee; Committee report (24 Oct 2022)
APH bill page notes
