Payday lending reform: Time to vote on it and move on

Posted September 16, 2019

Payday lending protections for vulnerable Australians has become such an urgent issue the Federal Member for Mayo Rebekha Sharkie has introduced the Coalition’s own proposed legislation to force some action from the Government.

The National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 was brought into the House of Representatives today as a Private Member’s Bill, with the Centre Alliance MP saying the time had come to act.

“It has been over 1000 days since the Government accepted the recommendations from the 2016 Independent Small Amount Credit Contract Review into this sector and it has been nearly two years since the Government circulated its own exposure draft legislation in response to that review,” Rebekha said today.

“But the years have passed and the Coalition Government is yet to introduce the Bill into Parliament, so I have done it for them.

“Nobody is seeking to eliminate small amount credit contracts. All I want, what the public want, and arguably what the Government has already accepted, is improved protections for people who use payday loans and consumer leases.”

The Bill replicates the Government’s own Exposure Draft legislation released in October 2017 and seeks to prevent irresponsible lending practices to low-income borrowers and to make the overall liabilities of small amount credit contracts (SACCs) more transparent.

Consistent with the Government’s exposure draft legislation, this Bill seeks to;

• introduce a cap on the total payments that can be made under a consumer lease;
• require small amount credit contracts to have equal repayments and equal payment intervals;
• remove the ability for SACC providers to charge monthly fees in respect of the residual term of a loan where a consumer fully repays the loan early;
• preventing lessors and credit assistance providers from undertaking door-to-door selling of consumer leases at residential homes;
• introduce broad anti-avoidance protections to prevent SACC loan and consumer lease providers from circumventing the rules and protections contained in the Credit Act and the Code; and
• strengthen penalties to increase incentives for SACC providers and lessors to comply with the law.

“Two years is too long to act and it’s time to put people before profits,” Rebekha said.

“Three million new payday loans have been taken out since the independent review was released in 2016 and we know from a Senate Inquiry into credit and financial services that payday lenders are concentrated in areas where there are higher unemployment and a higher proportion of single-parent families and that they are targeting people who are from socially and economically disadvantaged.

“We know that most Australians who take out these loans are not buying flatscreen TVs, they are people who are facing a time of crisis such as a broken-down car when they need to get to work or an unexpected illness, and they are looking for a short-term financial solution.

“My electorate is not counted among the poorest in the nation but we certainly have areas of disadvantage and my office regularly receives calls from desperate people who are in desperate financial need.

“We refer people to the community organisations who can assist, especially those who provide no-interest loans, but I would like to stop having to refer people to financial counsellors in order to extricate themselves from the spiralling debt of multiple payday loans."