Payday lenders under scrutiny
PAYDAY loan sharks in the Far North have been accused of questionable practices that exploit vulnerable people.
Cairns-based Indigenous Consumer Assistance Network operations manager Jon O’Mally queried the number of people being granted loans.
The network’s senior financial counsellor Ray Kent said there was a regular pattern.
“We see a cycle around consumer leases and payday loans and people see no alternative to obtaining necessary consumer goods such as fridges, washing machines and sofas except on lease,’’ Mr Kent said.
“They consider only the weekly cost and do not allow for the fact that the items will cost them two to three times the cost compared to if they purchased the goods outright.
“They are soon faced with meeting these costs or losing the products and their decision is often to take out a high interest payday loan.”
Mr Kent said these types of loans had grown despite reforms that were designed to regulate their use.
“Payday lenders often approach consumers to take out another loan after paying the first and many offer incentives that are designed to encourage family and friends to take out loans,” he said.
“So it is not surprising that in 2012, 40 per cent of payday loan customers took out more than 10 loans per year.”
Financial counsellors are demanding the Turnbull Government protect families and introduce the laws it promised.
Consumer law agencies around Australia, particularly throughout Queensland, are being inundated for calls for help from people trapped by short-term loan contracts and expensive rental leases for white goods and electronics.
A delegation from Consumer Action Law Centre and Financial Counselling Australia will head to Canberra today to urge new Assistant Treasurer Michael Sukkar to implement recommendations from the Turnbull Government’s own review and end the delays.
In 2015, then assistant treasurer Josh Frydenberg announced a review of laws pertaining to “small amount credit contracts”.
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