New code to protect Aussies buying solar panels

Ever thought about investing in solar panels for your home? If so, you’ll know it’s a big decision and there’s a lot to wrap your head around. Fortunately, the consumer watchdog is proposing a new retailer code to make solar purchases safer and easier.

Australia is the sunniest continent on Earth. Yep, even more so than Africa.

Which is why it makes sense that more than two million homes have already decked out their rooftops with solar panels.

Sure, the initial outlay is between $5,000 and $10,000, but solar installations usually pay themselves off in two to six years – and then they save you a whole lot of money on power bills in the long run.

The thing is, though, household solar can be tricky to research if you’re not familiar with the industry – not to mention all the potential government rebates and incentives you need to wrap your head around.

Fortunately, the ACCC is stepping in

The Australian Competition and Consumer Commission (ACCC) has proposed a new consumer code for retailers selling solar and energy storage systems, with a draft determination due on September 9.

The New Energy Tech Consumer Code (the Code) sets minimum standards of good practice and consumer protection and will apply to all aspects of customers’ interactions with participating retailers.

That includes their marketing, finance and payments, warranties and complaints handling processes.

“Products like solar panels or battery storage involve significant financial outlays for households,” ACCC Deputy Chair Delia Rickard explains.

“This Code aims to give consumers more protection and more information to help them make informed purchases.”

What will The Code cover?

Signatories to the Code must comply with obligations, including that they:

– avoid high-pressure sales tactics
– ensure their advertising is clear and accurate
– educate consumers about their rights
– provide clear information about product performance and maintenance
– take extra steps to protect vulnerable consumers
– implement effective complaints handling processes.

The proposed code will also effectively prevent signatories from offering finance through ‘buy now pay later’ arrangements.

Financing options

There are a number of state government programs across Australia that offer interest-free loans for eligible households in the solar space, including in NSW, Victoria, Queensland and South Australia.

If you’re not eligible for any of the above schemes, rest assured that there are other smart ways to finance the installation of household solar.

If you’d like to find out more, get in touch. We’d be happy to talk you through some of your options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Caviar and wine, anyone? What a court ruling means for you

Indulgences such as caviar, wagyu beef and the finest bottles of wine shouldn’t count against you when lenders assess your application for finance, a Federal Court judge has said.

Ok, so maybe Federal Court Justice Nye Perram has a slightly different grocery list to the rest of us.

But his recent judgement should be welcome news to potential borrowers who have splashed out on the odd luxury over the past six months and are worried that it would completely derail their loan application.

So what’s going on?

Well, the corporate watchdog (the Australian Securities and Investments Commission, aka ASIC) filed a court case against Westpac in 2017 in an attempt to strengthen lending standards.

ASIC argued that Westpac’s automated decision system relied solely on a household expenses benchmark that underestimated real living expenses and, as such, was flawed.

However, Justice Perram ruled that Westpac had done nothing wrong by using its automated system, rather than manually checking the borrowers’ living expenses, when approving more than 260,000 home loans between December 2011 and March 2015.

A tasty morsel from the judgement

Justice Perram said that current laws do not explicitly require banks to check expenses.

“[I’m] unable to discern why, as a matter of principle, the consumer’s declared living expenses must be considered,” he said.

“I may eat wagyu beef every day washed down with the finest shiraz but, if I really want my new home, I can make do on much more modest fare.

“The fact that the consumer spends $100 per month on caviar throws no light on whether a given loan will put the consumer into circumstances of substantial hardship.”

Basically, what Justice Perram is saying is that just because you fork out for expensive items before you apply for a mortgage, doesn’t mean you’re incapable of reducing your expenses once you’ve taken out a loan.

What happened next?

The Australian Financial Review (AFR) followed up on the decision with a scathing smackdown of ASIC in an editorial that asked: “why did ASIC even bother?”.

“Leave banks – the institutions with the expertise and incentive to write good loans – to assess risks for home loans. Not second-guessing bureaucrats,” the editorial stated.

“After all, it is hardly in a bank’s own interest to lend to people who are unlikely to be able to pay the money back.”

CoreLogic Research Analyst Cameron Kusher meanwhile wrote that it was not only a big win for Westpac, but the entire lending industry.

“The judge in the ASIC/Westpac case seems to really get it. While you might spend a lot more before you get a mortgage, getting a loan is about knowing someone has the capacity to change their spending behaviour once they have a mortgage,” he said.

“Lending has become so prescriptive when it is really the unexpected life events that cause someone to default on their mortgage. You can’t foresee everything.”

Meanwhile, ASIC commissioner Sean Hughes said the commission was consulting on new guidance in relation to responsible lending obligations.

What this means for your next loan application

Westpac says the decision provides clarity for the interpretation of responsible lending obligations, however consumer groups who found the decision “disappointing” are calling on the government to amend responsible lending laws.

While this court ruling may have the potential to somewhat relax the tight lending standards currently in place, it’s better to be safe than sorry when applying for a loan and we can provide you with some good tips on how to get your accounts in order.

After all, it is still up to the lender’s discretion (perhaps hold off on the caviar for a while longer!).

So if you’re considering applying for finance in the near future, get in touch.

We’d be more than happy to help guide you through the ever-evolving responsible lending landscape.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

On the hunt for a new loan provider?

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One in 10 consumers have switched credit products in the past year, according to new research, with Millennials and women in particular pouncing on offers from small banks, credit unions and building societies.

The financial landscape is shifting.

Over the past 12 months, 10% of consumers have switched credit providers, according to the Australian Consumer Credit Pulse 2019 report from Equifax, as once-loyal customers increasingly check out what lenders outside the Big Four banks have to offer.

Is now a good time to consider a switch?

With the RBA recently delivering back-to-back rate cuts, there’s no shortage of borrowers who are considering following suit and switching things up.

In fact, a further 11% of consumers intend to apply for credit in the next three months, says Equifax, and of these, half are looking to switch providers when they make their application.

James Forbes, General Manager, Marketing Services at Equifax, says that over the past 12 months the Big Four banks have ceased to be the first preference for many consumers who are switching credit products.

“Instead, they’re increasingly choosing small banks, credit unions and building societies,” Forbes says.

So what credit products are people switching?

Home loans and credit cards. They’re the big two.

Of the one in 10 people who made the switch over the past year, a quarter moved their home loans and nearly half moved their credit cards.

Home loans are also a popular product among the 11% of consumers intending to apply for credit in the coming months, making up half of the intended applications.

Who’s switching things up?

According to the report, the younger you are, the more likely you are to switch lenders.

In fact, out of all consumers who switched credit products in the past year, 43% were aged 18-34, and 32% were aged 35-50.

Women are also more likely to switch three or more of their credit products, while men are likely to switch just one or two.

What’s driving the behaviour?

Unsurprisingly, lower costs – including interest rates and fees – were the major consideration for switching across all credit product types, Equifax says.

However, consumers also cite better customer service and brand reputation as important considerations.

“In the wake of the Royal Commission, consumers are increasingly thinking about more than just cost when applying for credit,” says Forbes.

Keen to pounce?

With the RBA recently delivering back-to-back rate cuts, if you haven’t looked into your refinancing options lately, now might be the time to consider doing so.

Rest assured that we’re following the market closely and will be happy to run you through some mortgage and refinancing options if you’re on the hunt for a new lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Time’s ticking: ATO to report overdue tax debts to credit agencies

Businesses that put off paying large tax bills for too long may soon find that the Australian Taxation Office (ATO) has notified credit reporting bureaus.

The proposal is part of The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill, which was recently introduced into parliament.

The Bill will provide the ATO with the discretion to disclose to credit reporting bureaus when a business has a debt of $100,000 for 90 days or more.

“This will reduce the unfair advantage obtained by businesses who do not pay their tax debts and will encourage businesses to engage with the ATO to manage their tax debts,” says assistant treasurer Michael Sukkar.

Credit reporting bureau CreditorWatch adds: “By (the ATO) disclosing this information, the default would be visible on a commercial credit report and the credit scores of companies could be negatively affected.”

Will it be a hard and fast rule?

Unlikely – the key word above is “discretion”.

Mr Sukkar says it will apply to “particular businesses that are not effectively engaging with the ATO to manage their tax debts”.

So, if this applies to you and your business, the most important thing you can do is not bury your head in the sand.

This might apply to me – what are my options?

First, get in touch with the ATO, which encourages businesses to engage with it to manage their tax debts. You may be able to enter into a “sustainable payment plan” that is agreed upon by both parties.

However, not everyone enjoys the ATO impatiently hovering over their shoulder waiting for them to pay off a large tax debt.

If you’re one of those people, it’s definitely worth getting in touch with us to explore some of your other options with business loan lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Planning ahead: RBA says expect long-term low interest rates

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Good news for mortgage holders this week, with the RBA saying “it’s reasonable to expect an extended period of low interest rates”.

Figures released on Wednesday show that core inflation, the RBA’s preferred measure, is currently at 1.4%.

However, Reserve Bank of Australia (RBA) Governor Philip Lowe says it is highly unlikely the RBA will contemplate higher interest rates until it’s confident that inflation has returned to 2-3%.

“Whether or not further monetary easing (aka further rate cuts) is needed, it is reasonable to expect an extended period of low interest rates,” he said in a speech.

“On current projections, it will be some time before inflation is comfortably back within the target range.”

Will the RBA cut rates further this month?

The RBA will meet again on Tuesday, however it’s appearing increasingly unlikely that it will cut rates for a third consecutive month.

That’s because June quarter inflation figures released on Wednesday narrowly beat out the market’s expectations (+0.5.%) with a rise to 0.6%.

As a result, most experts are predicting that will be enough to postpone a third RBA rate cut to 0.75%, but not enough to prevent it from happening between now and the end of the year.

Get in touch

If you want an update on what the RBA’s latest comments on long-term low-interest rates mean for your current home loan situation, then get in touch.

We’re following the market closely and will be happy to run you through some mortgage and refinancing options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.