SUBJECTS: ACCC - Managing your Mortgage
KEVIN TURNER:
Australian homeowners who are under financial pressure are being offered practical advice by the Australian Competition and Consumer Commission on how best to deal with the problem. The move has been prompted by the unscrupulous practices of some real estate operators, according to the Consumer Affairs Minister Chris Bowen, who joins us now.
Good morning Minister.
CHRIS BOWEN:
Good morning Kevin.
KEVIN TURNER:
Minister, what are these agents doing, or firstly, are they agents?
CHRIS BOWEN:
Well no, they're not actually real estate agents. These are other people who have developed a business model which relies on people doing it tough in financial stress. They're saying to people 'look I can buy your house really quickly and I can give you the cash for your house in a couple of days time', instead of the normal turnaround of six weeks or so; and that, to many people, sounds very attractive. The problem is, to get that cash quickly, they're paying below the market rate. So you've got people who might have the Sheriff on the door or being hassled by debt collectors and they just think 'oh, I just can't take anymore. I'll see my house straight away to these people', and in the long run, while they might be dealing with the short term problem, in the long run they're selling themselves very short because they're not getting the full value of their house. They might be leaving themselves still with debt, if they sell it for less than the debt that they have or in any event they're selling it for less than they could have and people are worse off as a result.
In some areas it's quite common; the area that I represent, for example, in Western Sydney there's a sign on basically every second telegraph pole saying 'I'll buy your house quick, ring this number', and there's about nine or ten websites out there where you can go to, where these sorts of places operate. So we're very concerned about any business model which relies on vulnerable people and we want to give people as much information as possible about what they can do during this situation.
KEVIN TURNER:
Of course, that's good advice too. You'd have to be fairly desperate though, Minister wouldn't you, for this to happen?
CHRIS BOWEN:
You would, but there's a lot of desperate people out there with interest rates having gone up over the last few years, with costs of living, there's a lot of people who are in danger of losing their home and are very concerned about it, they're very stressed about it.
KEVIN TURNER:
Now you mentioned the area of Sydney there, but are there any other areas around Australia that you're aware of?
CHRIS BOWEN:
Oh look, as I say, the websites, I think, operate across the country. I'm not aware of other areas where it's regularly on the telegraph poles, I'd say that there are, I'd say it's more a metropolitan thing than a rural or regional thing. Clearly, we have got these websites; anybody can be vulnerable to it.
KEVIN TURNER:
Now if you've got evidence that this is happening is it illegal and can you do anything about it?
CHRIS BOWEN:
Well the ACCC has the view that it could be what we call unconscionable conduct. Unconscionable conduct is illegal. Basically unconscionable conduct has been defined by the courts as conduct which means that any reasonable people would not be able to sleep at night over what they're doing. So there is evidence that it could be unconscionable conduct, or a view it could be unconscionable conduct. But the trouble is, once the transaction has gone through; once the house is sold – it's done. If you enter into the transaction and before it's complete you change your mind, ring the ACCC immediately and the ACCC will be able to take some steps for you. But once it's done, it's done and it's very hard to undo the omelette. That's why we think prevention is better than cure. Through programs such as yours and through the new page on the ACCC's website 'Managing your Mortgage' at www.accc.gov.au and then there's a 'Managing your Mortgage' website and it provides people with practical information about what they can do in this situation and people shouldn't be rash, they shouldn't rush into a decision. They should get second opinions on the value of their home et cetera.
KEVIN TURNER:
Chris, have you got any indication if you've had many complaints from the public?
CHRIS BOWEN:
Well one of the things is Kevin, as you'd appreciate, people get a bit embarrassed about their circumstances and don't like saying 'look I've just sold my home for much less than it's worth'. We do have people in the community raising it with us as local MP's and it is a concern, but I think it's a bigger concern than that because people do it and don't necessarily report it, or raise it, because they realise they've made a big mistake but it's too late to do anything about it.
KEVIN TURNER:
Chris, thankyou for joining us and taking the time today; and that website again is?
CHRIS BOWEN:
www.accc.gov.au and there's a 'Managing your Mortgage' page that you can click on too, once you're on that site.
KEVIN TURNER:
We've been talking to Chris Bowen – Minister for Consumer Affairs. Minister, thank you for your time.
CHRIS BOWEN:
Great pleasure.