Centrepay is a free direct bill-paying service offered to customers receiving Centrelink payments. It was originally developed for the indigenous housing sector to help pay rent and utilities. Today it is a $2 billion a year operation used by almost 600,000 Australian residents.
The Report of an Independent Review of Centrepay has highlighted concerns that the use of Centrepay deductions for household goods rentals (and other sectors such as funeral benefit plans) often results in the customer overextending him or herself financially, and sometimes this results in insufficient funds then being available for basics such as food.
The Report recommends that the Centrepay system be reworked to ensure a better focus on its customers. For example it recommends that a new partial hierarchy of Centrepay deductions be instituted based on criteria of ‘essential services’ (rent and utilities) so that they always are deducted first (rather than relying on the current system of first authorisation lodged/first deduction paid).
It also recommends that mechanisms be established to more adequately scrutinise affordability of goods and services purchased through Centrepay, and the sustainability of payments, at the deduction authorisation stage.
The main concern about household goods rental providers is that their provision of consumer durables and appliances via rental contracts often cost the customer far in excess of the value of the goods.
A Centrepay customer without a credit card or an acceptable credit history who is in need of a fridge or a bed, typically has only two options available: rent the goods or approach a short term/high interest lender.
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Posted 13th August 2013 by David Jacobson in responsible lending