President’s Message

By Steve King, President of CHERPA

With the federal election looming, CHERPA has more responsibility than ever to advocate on behalf of our members and ensure our interests are strongly represented to the government.

In seeking how to best protect our members, CHERPA continues to pursue an industry-wide code of practice, modelled largely after our own Code of Conduct. Such a code would take enormous strides towards uniting our industry, and would illustrate strongly to the government our capacity for self-regulation and governance. This, we believe, is one of the main remedies for improving how our industry is perceived by regulators including ASIC, and would inoculate us against many of the false claims of the consumer advocacy industry.

In light of the probable change of government that may occur this time around (at least, based on recent polling), we consider the improvement of our industry’s general respectability as an extremely important key to protecting us all from potentially less favourable political circumstances that may soon arise. We are pleased to report that we have had a number of very positive dialogues improving relations with key industry players outside of our member base, giving us hope that an industry-level code may be closer than we think.

I also want to take this opportunity to remind all industry members to send out their statements of account 90 days prior to lease agreement expiration, and to take care in all wording used when allowing clients to make an offer to purchase their goods. As per this month’s article from our solicitor friend Ronen Atzmon, with regard to lease agreements we cannot infer ownership or the right of ownership or an offer for sale – the client needs to make the offer to purchase – nor can we make a predetermined buyout figure, else the agreement may be seen as a credit contract and we may fall foul of the provisions of the National Credit Code. Recent legal proceedings show us all that these things do really matter!

As for our next AGM, we look forward to the opportunity to meet again in person with our members and guests some time in June or July depending on the election outcome. More information on this soon, so watch this space!

Until then and thereafter, please keep your chin up! We all must keep working with the expectation that we will be able to do business as usual, and that we will surmount all of the obstacles that come our way.

Finally, I wish to express how strongly we recognise and appreciate everyone’s ongoing financial support. On behalf of the board of CHERPA, we look forward to representing your interests and improving our industry conditions for a long time yet.

“We’ve come too far just to come this far.”

Let’s keep going.

Steve King

President of CHERPA

Ownership Transfer

Small Print, Heavy Consequences

By Ronen Atzmon, Solicitor

Introductory Note from Steve King, President of CHERPA:

This article details some public legal proceedings against industry members which originated from alleged breaches in 2020 or earlier. Since then, I wish to note that we have strengthened relations in particular with Rent4Keeps and have hopes of ongoing friendly cooperation between us. We nevertheless warn all industry members to take Ronen’s article seriously as any improper industry activities, or even allegations of improper activities, are unlikely to go unnoticed by ASIC. 

Please read on.

Summary: The terms of your consumer lease agreements matter – violations of the National Credit Code can happen easily and land your company in hot water. Recent legal proceedings remind us that ASIC is monitoring the industry closely. Get advice if you are uncertain of what to do.

As you no doubt have heard, ASIC commenced proceedings against Rent4Keeps and Darranda (a credit licensee owned by the owners of the Rent4Keeps), and against Layaway Depot (Proceeding). 

The nature of the Proceedings are different and the documents to the Proceedings can be found by conducting a Google search.

The Proceeding against Layaway Depot is a reminder that credit activities must not be conducted unless the operator holds a credit licence or is authorised as a credit representative of a credit licensee. Layaway Depot conducted a payment by instalment facility and because the total price paid under the agreement exceeded the cash retail price, they required a credit licence which they did not hold.

The Proceeding against Rent4Keeps is more complex and involved the transfer of ownership of the leased goods. More specifically to the Proceeding, CHERPA members will note from ASIC’s statement of claim that there are a number of alleged defects in the Rent4Keeps and Darranda contracts. 

Firstly, there is an apparent inconsistency between the gifting provisions which are subject to the lessor’s discretion (5.1) and other provisions in the credit contract (5.2) which state that if the lessee complies with the contract, the ownership is transferred automatically.

Secondly, ASIC intends to demonstrate that Rent4Keeps and Darranda never had an intention to implement the gifting program and that the gifting provisions are a sham to hide the fact that the lessee will own the goods at the end of the lease term and that the lessor always intended for the lessee to own the goods.

If the prosecution is successful then Section 169 of the National Credit Code has been breached, and if that is the case then by virtue of Section 9 of the National Credit Code, the consumer lease will be classified as a sale of goods by instalment credit contract to which the National Credit Code provisions, other than Part 11 Consumer Leases, apply to.

In most cases, when a consumer lease is reclassified as a sale of goods by instalment, there are bound to be Code violations such as failure to disclose retail cash price of the goods, failing to adhere to the 48% interest rate cap and misleading information in relation to ownership, as under a sale of goods by instalments (as a credit contract) the ownership to the goods passes to the consumer on entering into the contract (see Section (3)(d) of the Code).

This Proceeding reminds us all that ASIC is watching and monitoring the industry and will take enforcement action when it comes to consumer protection. Whilst ASIC is the regulator under the NCCP Act, ASIC champions itself as a consumer protector and hence, when there is a perceived harm to consumers, ASIC will take action.

It is also a reminder to CHERPA members to ensure that the transfer of ownership provisions in their consumer lease are clear and not ambiguous. Please seek legal advice if for any reason you are uncertain of what to do.

If any CHERPA member requires consultation, I will gladly provide them with assistance.

Ronen Atzmon, Solicitor

CHERPA is back with support for defence personnel.

As some of our members are aware, CHERPA once offered a service to Defence personnel through Defence Housing Australia (DHA) allowing them to rent household goods when they were being re-posted to a new area.

CHERPA offered this complimentary service to all its members. As applications came in, CHERPA would sign them up to a rental agreement, then redirect the enquiry to a CHERPA member participating in the program to supply the items, fulfil the rental requirements and be the managing agent for any future service required.

The original DHA agreement ran its course and was concluded in late 2020 however, we are pleased to announce that the service is being revamped and we will soon be re-launching as CHERPA’s “Better Living for Defence” service.

CHERPA is re-launching Better Living for Defence.

Again there is no cost for any CHERPA member wanting to participate in the “Better Living for Defence” program. CHERPA is offering this service, to support Australia’s Defence personnel and potentially increase our members customer rate.

To participate in this program, please email or you can ring Tim on 0418 553 093 with any questions.

If you would like a bit more information and an indication previous pricing structure, please go to the DHA page on CHERPA’s website outlining the previous program, or click below.

As with the old service, the general terms for the new “Better Living for Defence” program include:

  • No fixed term (That’s because they can be posted anywhere from for 3 months to 3 years).
  • No early termination fees.
  • Rental payments will be managed by CHERPA then redistributed to the managing agents on a month to month basis, less a small commission.
  • Free delivery.
  • Free pick up if item is no longer required.
  • Buy options available at any time.

Consumer lease sector urges Parliamentary support.

CONSUMER LEASE SECTOR URGES PARLIAMENTARY SUPPORT FOR THE NATIONAL CONSUMER CREDIT PPROTECTION AMENDMENT (SUPPORTING ECONOMIC RECOVERY) BILL 2020

We appreciate the ongoing feedback and dialogue with all members of parliament on this important area of credit reform and we congratulate the Treasurer and Assistant Treasurer and Federal Government for introducing it.

The Parliament needs to swiftly consider this legislation and at the appropriate time, pass the bill in its current form. It includes additional consumer protections for those Australians seeking consumer leases.

The sooner the Federal Government’s reforms pass the parliament, the sooner the entire sector can be brought up to the high standards that CHERPA and CHERPA’s members have exhibited for a long time now. That’s good for Australian business and more importantly, it’s good for Australian consumers.

CHERPA is the national peak body that represents the overwhelming majority of consumer lease providers.

The effect of the Federal Government’s consumer credit reforms for the consumer lease sector, will be to bring all consumer lease providers up to the high standards being maintained by CHERPA through its code of conduct that has been in place for several years now.

CHERPA’S members through its code of conduct and strong engagement with the credit regulator, ASIC, maintain the highest standards. These high standards are demonstrated through a miniscule complaint rate with the Australian Financial Complaints Authority (AFCA).

The legislative changes are additional and important consumer protections supported by CHERPA and its membership. They have been well consulted on by the Federal Government and Treasury over a significant period of time now. CHERPA now looks forward to consulting with Treasury and ASIC on the regulations.

CHERPA’s members are increasingly national in their business scope and so the national government and parliament is the place for consumer lease providers to be regulated.

We are now calling on the Federal Parliament to pass with the highest priority and at the earliest possible opportunity, these vital consumer credits reforms and protections. Needlessly holding them up means less certainty for hard working Australian businesses and less protections for Australians who want consumer leases.

Government’s Credit reforms strike the right balance.

GOVERNMENT’S CREDIT REFORMS STRIKE THE RIGHT BALANCE IN PROTECTING CONSUMERS WHILE PRIORITISING JOBS AND GROWTH

CHERPA welcomes today’s economic reform announcement by the Federal Government that ensures Australians get access to credit and consumer leases in a socially responsible way.

Today’s credit reforms will be a much needed shot in the arm to the Australian economy and give confidence and certainty to small businesses and consumers.

The reforms as they apply to consumer leases ensure all Australians can access consumer leases and protections already provided by CHERPA members who abide by a strict Code of Conduct.

The consumer protections proposed by the Federal Government today are available to those Australians who have a consumer lease from a CHERPA member.

CHERPA has been long calling for legislative certainty for consumers and consumer lease providers that includes both a cap on total lease payments (including GST, delivery and installation fees) and a protected earnings amount of 20 per cent of net income for consumers.

The Treasurer and Assistant Treasurer have listened to consumer and industry feedback and struck the balance in ensuring consumer lease providers can survive and consumers can continue to buy basic white goods and other products.

CHERPA looks forward to working with the Government and Treasury to ensure the legislation achieves the intent of today’s announcement and works for small business and consumers.

 

Media contact:

Tim McKenzie

0418 553 093