PoliticalClaims.au

The government's position was internally contradictory:

• The government claimed a credit crunch required action, but lending data showed the opposite - credit was actually flowing freely
• The government claimed to "strengthen protections for vulnerable consumers" while removing the primary protection (lender assessment of suitability)
• The government claimed mortgage brokers' best interest duties would fill the gap, yet simultaneously removed the general responsible lending framework that made those duties meaningful
• The government said ASIC would have more power while transferring remaining responsibilities to APRA (an agency Hayne identified as having no consumer protection track record)

However, this reflects legitimate policy disagreements:

The Coalition's position was not that consumer protection is unimportant, but rather:

• That responsible lending obligations were excessively prescriptive
• That COVID-19's economic impact justified temporary flexibility
• That alternative mechanisms could protect consumers
• That credit flow to households and businesses was important for recovery

These are substantive policy positions, even if the evidence suggests they were misguided.

The core problem was overriding a royal commission recommendation:

The most significant issue is that this was the deliberate rejection of Recommendation 1.1 of the royal commission - the very first recommendation, explicitly designed to maintain consumer protections. This wasn't a minor technical adjustment or a different interpretation of Hayne's findings. It was a direct contradiction of the commission's core findings that responsible lending standards were correctly calibrated and should not be weakened.