House of Assembly Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia House of Assembly published Grievance Debate Consumer Lease Agreements CONSUMER LEASE AGREEMENTS Mrs GERAGHTY House of Assembly Torrens Mrs GERAGHTY (Torrens) (15:30): Thank you. The matter I want to raise today is of concern to me and it relates to the traps into which consumers can fall when they enter into a consumer lease agreement. Recently, a constituent came to see me after her four year old LCD TV broke down. My staff arranged for a TV repairman to look at it. Unfortunately, the manufacturer of that particular brand had stopped production and there were no spare parts in Australia, so the TV was basically unable to be repaired. The constituent is a pensioner. She then sought to obtain a replacement TV, but because of her limited income it can be quite difficult for people in her situation get a loan. She did not pursue that avenue, although I am now aware of one bank that does lend small amounts. However, the constituent went to a very well-known electrical retail outlet that specialises in consumer leasing or rental agreements and she organised a rental TV. I do not think at that stage she considered the full extent of what renting can cost, and that is where my concern lies. The day after signing the rental agreement she showed us her three year rental agreement contract, which was for $61.50 a month. This equates to $738 per year or $2,214 over three years. At this point the constituent realised that the rental agreement was, indeed, very expensive. Some of the facts about this arrangement are that the contract is for 36 months at $61.50 per month at a total cost, as I said, of $2,214, with a residual to pay of $285.30 if she wants to buy the set after the three years. Oddly, the contract encourages the consumer to insure the TV for $1,141. The other interesting component of the contract is the early termination provision, which means that, if the constituent had sought to terminate the lease just one day after she had signed up, she would be up for 80 per cent of the rental payments which would have been payable to the end of the lease agreement. That would have cost her $1,771.20, or $630.30 more than the TV was actually worth. Some further investigation discovered that she could have bought the TV for $1,099 on a 12-month interest-free loan if she had had the $300 deposit. That was $1,099 instead of the $1,141 that she paid on a rental plan. Clearly, it appears that if you rent the TV not only do you pay twice the price at the end of the three year rental plan but also you are charged more for it than if you purchased it on a 12 month interest-free plan, which clearly is taking advantage of people in poor financial circumstances. Unfortunately, given her situation, my constituent was not in a position, as I said, to pay the $300 upfront. Sadly, if she had been able to shop around she would have found—as we did—that she could have bought that same TV at another store for less than $1,000. I am raising this issue because consumers should thoroughly read any credit agreement before they sign up so that not only are they fully aware of the obligations they are entering into but also they clearly understand the financial implications. We all know that sales assistants do not always fully explain this to us. The big problem is that there is no cooling-off period with these types of agreements, so it is really easy for people to get trapped into very expensive arrangements and it is adds to the vulnerability of people on low or fixed incomes. Thankfully, my constituent has been able to resolve her problem—not cheaply, I might add. I understand that the federal government is looking at these matters but, clearly, on any agreement that people sign, rental or otherwise, there needs to be a cooling-off period.