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CAFBA’s Response to the Productivity Commission

CAFBA has now put forward our second submission to the Productivity Commission, which concentrated on three key areas. CAFBA had previously acknowledged the work of the Commission in regard to distinguishing consumer and commercial finance.

CAFBA particularly brought to the Commissions attention the unfavourable risk weighting currently attributed to small business lending, which could have the effect of banks recommending loan products that used the family home as security, as this provided a more favourable risk weighting. This should be addressed by APRA with APS 112, where a more favourable weighting could be attributed, particularly for equipment finance where the underlying asset has real intrinsic value.

CAFBA also again highlighted the Point of Sale Exemption contained in the NCCP Act, which CAFBA believes could lead to poor consumer outcomes. CAFBA has been advocating the removal of the exemption for many years. It is pleasing that the POS Exemption was today raised at the Royal Commission into banks, and CAFBA looks forward to continuing engagement with Government, the Productivity Commission and the Royal Commission for a sensible outcome on this issue.

To view CAFBA’s full response - click here.

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