Payday loans exploit vulnerable families
Low income and vulnerable families will continue to be exploited by payday lenders unless there is firm action by the Federal Government to reform consumer credit laws.
The report of the Senate Economics Legislation Committee released this week confirmed that current proposals to reform consumer credit laws run the risk of being ineffectual in protecting consumers who access payday loans.
“Every day we see the devastating impacts of oppressive payday loan interest rates and fees on families already at breaking point”, said Sue King, Director Advocacy at ANGLICARE Sydney.
“Many families who access payday loans only need short term finance to cover a difficult period, but they get caught in paying back interest and fees that often more than double the initial loan.
ANGLICARE Sydney is concerned that there is a presumption toward protecting the pay day loan industry when low income families should have more access to mainstream financial products.
“It is morally irresponsible for Government to watch payday lenders exploit struggling families who are trying to build independence and not put a stop to it,” said Ms King.
“We do not need to protect payday lenders. Instead Government should be working with industry to provide low income families access to mainstream financial products.
“Most loans from payday lenders are less than $1000 and are for basic items like food and bills, or appliances. People should not have to go into terrible debt to put food on the table.”
While ANGLICARE Sydney welcomes suggested caps on fees and charges, it believes more consultation is needed to fundamentally reform dependence on pay day lenders.
“There is huge opportunity for Government, NGOs and financial institutions to partner in equipping vulnerable families with skills for long term independence rather than leaving them to the mercy of short term loan sharks.
“Short term finance will always be needed by some but it should not inflame their hardship. Instead it should help them overcome it.”
