Protecting the Most Vulnerable in Consumer Credit Transactions
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There are two key ways in which the Australian Uniform Consumer Credit Code seeks to protect consumers in relation to consumer credit transactions. The first is by means of disclosure regulation where information is required to be disclosed to the consumer before the credit contract is entered into and the second is by way of “safety net” provisions, where contracts can be varied or set aside in the event of hardship, a finding that the transaction was unjust, or a finding of unconscionable fees or charges. This article explores the limitations of both of these means of protection, particularly in the case of vulnerable, low-income consumers. In order to highlight the inadequacies of these forms of consumer protection and the need for regulatory reform, we draw on interviews conducted with 30 low-income consumers who had recently signed a credit contract, focusing on their understanding of information disclosed in the contract, as well as their responses to hypothetical unfair terms and their understanding of their rights, for example in the event of an unjust transaction. These interviews were conducted as part of a joint research project between Brotherhood of St Laurence and Griffith University’s Centre for Credit and Consumer Law, funded by Consumer Affairs Victoria.
KeywordsConsumer credit Disclosure regulation Safety net provisions Low-income consumers
This research was funded by the Consumer Credit Fund, Victoria, Australia. We would also like to thank Samantha Robinson, Greta McDonald, and Greg Fisher for assisting with the recruitment of research participants and the anonymous reviewers for the helpful comments on this article. Most importantly, we would like to thank the 30 low-income people who participated in the research and openly shared their opinions. Their willingness to talk about their experiences with contracts and views of credit regulations has provided helpful insights.
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