What is it we don't know?, page-47

CP

The recommendation that lessors disclose Base Prices has been accepted by Treasury, so it is not an if-Labor-gains-power matter – it could happen under the current Government. The words Treasury used are, “The Government supports disclosing the base price of a lease and the difference between the base price and the total cost of a consumer lease.”

As I have posted before, lessors exclude ownership options in contracts because Consumer law classifies leases with such options as Credit Contracts, and Credit Providers cannot take a mortgage over essential household goods to secure loans. Essential household goods include kitchen equipment, fridge, freezer, beds, TV, stereo, washing machine, dryer, educational equipment for children (e.g., a computer), baby equipment, and video recorder. If Consumer Leases could include purchase options, then the contracting parties could agree that lessees may terminate leases at any time, pursuant to buy-out options that could taper the buy-out prices to near-zero over the term of a lease. TGA harped on this issue in its submission to Treasury in 2016, but without the at-anytime rider that I suggest.

Oddly, the Consumer Leasing legislation states, “Lessors must provide information on request about the costs of terminating a lease and the actions required by the lessee.” A written reply could be general enough to cover the residual life of a lease, and hence it could function as a conditional option. Likewise an end-of-lease statement must be issued no later than 90 days before lease expiry, but it could, it seems, be issued much earlier, and it usually contains an offer to sell the goods on expiry of the lease. Complying with these two legal injunctions seems not to convert leases to Credit Contracts.