Changes to Centrepay deductions

The Federal Government has announced that it will restrict the type of consumer leases customers can pay for by using Centrepay to increase protection for vulnerable Centrelink customers.


The number of low-cost finance options supported through the service will also increase.


Minister for Human Services Marise Payne said the new criteria for consumer leases will mean those leases that run for an indefinite period, or have a duration of four months or less, will be excluded from Centrepay and only those which are regulated under the National Consumer Credit Protection Act 2009 will be allowed.


"These leases provide better protection for vulnerable customers as businesses must comply with the responsible lending obligations overseen by the Australian Securities and Investments Commission (ASIC)," Minister Payne said.


"A Department of Human Services working group with Treasury and key stakeholders will review Centrepay policy to promote the disclosure of effective interest rates by Centrepay registered providers."


Centrepay services will also be expanded to allow for Centrepay deductions for low interest loans, savings plans and layby.


"Following an independent review of Centrepay in late 2013, DHS now links to ASIC's Money Smart website and provides information to inform customers about alternatives to consumer leases, to encourage informed decisions about renting versus buying especially in the context of low interest loans," Minister Payne said.


"Funeral insurance will also be excluded from Centrepay, because of the particular risks funeral insurance raises for vulnerable customers. Centrepay will still be available for scheduled repayments of funeral expenses and pre-paid funeral plans."


These are the latest in a series of changes made to Centrepay since the review in late 2013.


"Centrepay is a free voluntary deduction service, and its benefits are widely acknowledged by community organisations. It is used by well over 600,000 people in receipt of Centrelink payments to pay bills and meet ongoing expenses," Minister Payne said.


"While customers may still use Centrepay for regulated consumer leases, I would encourage people to carefully read the fine print and consider all of their options.


"ASIC's Money Smart website has a calculator to help people make informed decisions about buying versus renting, and people should also consider other alternatives, like financing the purchase of household goods through low or no interest loans.


"There will be a 12 month transition period, starting on 1 July this year, for existing deductions. During this time the department will communicate directly with relevant businesses and customers.


Further information about Centrepay is available at


For further information about the announcement please see Centrepay Background


22 May 2015.