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Consumer credit protection bill to cost retailers $760 million

Peak retail industry body the Australian Retailers Association (ARA) said retailers across Australia would be forced to pay $760 million* to comply with Government's Consumer Credit Protection Bill, leaving consumers with limited point-of-sale (POS) finance options.

ARA Executive Director Richard Evans said individual compliance costs for any retailer offering POS finance options through a through a third-party credit provider could be up to $27,000 in staff training and other obligations, which would be a serious threat to the viability of smaller retailers. 

"Under the proposed consumer credit legislation, retailers are likely to limit their in store credit products rather than face the extra cost burden to their business, ensuring retailers miss out. This would result in an expected loss of $800 million in retail sales and the potential loss of 24,000 retail jobs," Evans said.

"While the legislation is largely designed to ease community concerns about disreputable financial advisers and lenders, the unintended consequence is that retailers offering point of sale (POS) finance to customers will be forced to comply and be subjected to fines or criminal sanctions.

"The new laws place the responsibility of assessing a customer's ability to afford and properly manage a line of credit on the retailer, rather than the finance provider, which is totally unworkable from a retail perspective.

"This means retail staff would need to be trained, accredited, registered and licenced to offer credit assistance to the same level as finance brokers. This is an unnecessary burden on retailers and a double up of regulations that would already be imposed upon credit providers under the new regime.

"The ARA is calling on the Federal Government to consult with retailers and the POS finance industry and impose new regulations at the credit provider level only.

"To ease the burden and cut costs for retailers the Government must reconsider the Consumer Credit Protection Bill and apply a general exemption to retailers," Evans said.  

For over 105 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.5 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

* PwC Report: The Impact of Proposed National Consumer Protection Bill on Retail Point of Sale Finance

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