Federal Member for Oxley Milton Dick MP today hosted the Pay Day Loans Community Roundtable at the Salvation Army in Goodna with over 50 local support and advocacy groups calling for an end to the pay day lending rip off.
Joined by Vice President of Financial Counsellors Association of Australia (Queensland) Jillian McKinley, it was clear that the community has had enough of loan sharks ripping off vulnerable Australians.
Mr Dick said today’s event was a strong message from the community that this out of control industry must be reined in.
“Today we have heard from local support groups, churches and leading advocacy organisations that everyday Australians are being ripped off every day by loan sharks” said Mr Dick.
“We know that some people are being charged interest rates of 884% on household goods which is just unacceptable.
“The community voices here today have been loud and clear that this rorting of consumers must be stopped.”
In the last sitting week of Parliament, Mr Dick and Labor’s Shadow Minister for Consumer Affairs Tim Hammond MP introduced a Private Member’s Bill to reform payday lending and rent-to-buy laws, known as the Small Amount Credit Contract (SACC) Reforms.
The Bill is an identical copy of draft legislation released by the newly minted Deputy Prime Minister when he was the Minister for Small Business in 2017. The Bill was approved by Cabinet, but later buried as a result of pressure from its own back bench.
Since Mr McCormack published his draft bill last year a group of backbench Government MPs, known as the ‘Parliamentary Friends of Payday Lending’ has emerged seeking to bury the reforms.
The SACC reforms, which the Government committed to in November 2016 would:
- impose a ceiling on the total payments that can be made under a rent-to-buy scheme;
- require payday loans to have equal repayments and equal payment intervals;
- remove the ability for SACC providers to charge monthly fees on residual term of a loan where a consumer fully repays the loan early;
- ban unsolicited sales of the schemes; and
- introduce broad anti-avoidance protections to prevent payday lenders and rent-to-buy companies from circumventing the rules;
Labor has consistently encouraged the Government to bring forward legislation to implement the reforms in the interests of improving protections for vulnerable consumers of payday loans and rent-to-buy schemes.
“Since the Government won’t introduce their own legislation, we have done it for them” said Mr Dick.
“It’s vital that these reforms are passed as soon as possible to protect vulnerable Australians who are being preyed upon by these loan sharks.”
The bill will be debated when parliament resumes next week.
Pay Day Lending Facts and Figures
The figures below are taken from a recent report from the Consumer Action Law Centre
- The rate of vulnerable Australian families being taken advantage of by pay day lenders has almost doubled over the past decade, with 650,000 financially stressed households now holding a pay day loan.
- The number of borrowers taking out more than one payday loan in the preceding 12 months has grown from 17.2 per cent in 2005 to 38.0 per cent in 2015.
- This means that average number of loans per loan borrower is 3.64.
- 40 per cent of people who entered into a SACC loan were unemployed.
- A quarter received more than 50% of their income from Centrelink.