Response to the recommendations of the Independent Review of Centrepay
The Independent Review of Centrepay report was publicly released on 5 August 2013. The Review received 29 submissions from interested parties. The report set out 89 recommendations.
Read the Independent Review of Centrepay report.
Full response to the 89 recommendations
We have responded to all the recommendations. Our responses briefly outline the changes we have made and how we intend to introduce further improvements.
Our response was last updated in January 2016. Read the full response to the 89 recommendations.
Highlights of our response
We have considered the recommendations of the Independent Review of Centrepay. The key responses include the implementation of a new deduction statement, a revised Centrepay objective and framework, improved communication and streamlined feedback and complaints mechanisms.
Revised Centrepay objective
The new objective defines Centrepay as a deduction service. The new objective is:
To assist Customers in managing expenses which are consistent with the purposes of their welfare payments, and reducing financial risk by providing a facility to have regular deductions made from their welfare payments.
Revised Centrepay framework
The management of Centrepay is moving from a contractual framework to an administrative framework. The new administrative framework will give Centrepay a number of key benefits, including:
- procedural fairness and consistent decision-making in relation to the approval or rejection of businesses applying to use Centrepay
- reduction and simplification of processes and documentation for business
- revised policy and terms that clearly set out new eligibility and approval criteria to support an improved process that includes clear definitions of excluded goods and services
- the introduction of procedural guides that explain the operational aspects of Centrepay
- more options for the department to take action when we identify non-compliance with the policy, including the ability to fully or partially suspend a business
- increased capacity to act in the interests of the customer or department when issues are identified or being investigated
We will increase staff knowledge of Centrepay through training and communication programs to assist with the promotion of Centrepay to our customers.
Streamlined feedback and complaints mechanisms
Centrepay feedback and complaints will now be monitored separately.
Goods and services
Some goods and services will be excluded from Centrepay.
Exclusions from Centrepay
Some insurance and consumer leasing products will be subject to a grandfathering period. This means existing deductions will gradually be transitioned off Centrepay over a specified time and no new deductions can be authorised.
- Insurance – products where benefits require payments to continue until the death of a nominated person are excluded. These are subject to a grandfathering period. Examples include funeral and life insurance and payments to brokers of these products. Alternatives to funeral insurance such as funeral plans, scheduled repayments of funeral expenses and prepaid funerals are still included. General insurance such as home and contents and motor vehicle insurance continue to be supported.
- Consumer leasing – consumer leases that are not regulated under the National Credit Code. For example, leases of indefinite duration or for less than 4 months are excluded and are subject to a grandfathering period. Fixed term leases are still included, as long as they are consistent with the Australian Securities and Investments Commission’s regulatory requirements. The new policy supports alternatives to leasing, such as layby and no or low interest loans. Customers will be informed about these alternatives.
- Debt consolidation – commercial debt consolidation and debt collection that exposes customers to exploitation will continue to be excluded
Repayments of debts consolidated through government supported financial counselling organisations will be allowed. This is in support of our customer’s need to stabilise their finances.
These exclusions are based on the following considerations:
- consistency with the purpose of welfare payments
- customer vulnerability when purchasing a product or accessing a service; for example, financial stress due to inflated costs, and
- customer exploitation
Businesses that trade primarily in ‘hamper style’ goods and services will continue to be excluded.
New goods and services
We recognise the importance of our customers’ need to reduce debts and stabilise their finances. To assist with this, customers will be able to use Centrepay for the following services:
- Savings – to support an alternative way to purchase household goods
- Disability and community services – to allow deductions to providers who deliver goods or services under the National Disability Insurance Scheme
- Layby – to allow layby - a payment in advance or by instalments - for household goods
- Low interest loans – to support social inclusion and as an alternative to consumer leases
New assurance framework
Building on current compliance processes, a broader assurance regime is being implemented. It is based on prevention, detection and appropriate responses when non-compliance is identified.
The new framework includes improved education and support for businesses to help them to continue to be eligible for Centrepay. There will be additional random and targeted assurance checks. We have separated our assessment of business applications and compliance activities to ensure the integrity of the program.