Thousands of retailers could be forced to stop providing point-of-sale finance to their customers if the Federal Government introduces proposed consumer credit legislation.
The Australian National Retailers Association (ANRA) is providing a submission to the government on the legislation, which is intended to govern any ‘credit assistance’ between a credit provider and a consumer.
The proposed legislation will put the onus of assessing someone’s credit worthiness onto the retail sales assistant. This is currently the responsibility of the finance provider.
“Retailers are not finance brokers. The best person to assess someone’s credit worthiness is the person lending the money, not the retail sales assistant,” said ANRA CEO Margy Osmond.
“If this legislation is passed, retail staff will have to be trained and accredited to provide the same financial advice that the credit provider does. It’s essentially a doubling up which is unnecessary and costly for businesses.
“We’re calling on the Federal Government to consult with retailers and the POS finance industry, instead of rushing this legislation through after only a few days consultation.
This legislation will have unintended consequence for retailers of all shapes and sizes, from the man who replaces your hot water system, right through to your local Harvey Norman or David Jones, selling furniture and white goods.
Osmond said many small- and medium-sized retailers who rely on POS finance may find it’s not worth their while to provide consumer credit because the compliance burden will be too onerous. They may have no other choice but to stop providing POS finance.
The current legislation already deals with retailers who may act irresponsibly and offer credit to consumers who can’t afford it. Consumers are already protected by the provision imposed on the credit provider.
“The timing of these changes will risk making POS finance unviable in a climate where we’ve already seeing reduced credit availability due to the economic downturn.”