Feds need to back state bid for payday lending protections
Federal Member for Mayo Rebekha Sharkie has called on the Federal Government to stop "dragging the chain" on payday lending reforms and to back up moves by the SA Government to protect vulnerable people from unscrupulous loan shark practices.
"I welcome reports today that South Australian Attorney-General Vickie Chapman has asked Consumer and Business Services to review laws pertaining to using payday loans and consumer leases affecting SA businesses and consumers," Rebekha said.
"I share the Attorney-General's frustration that successive Federal Governments have dragged their heels about implementing their own legislation drafted in 2017 on this issue based on the recommendation of their own review released in 2016.
"I actually introduced the Federal Government's draft legislation as a Private Member's Bill in September last year and, in an attempt to keep the pressure on, my Centre Alliance colleague Senator Stirling Griff introduced exactly the same legislation in the Senate in December.
"I find it tragic that a Senate Inquiry into our legislation - based on the Government's own legislation - has been postponed due to COVID-19.
"This is a critical time of enormous financial stress for people and desperate people need consumer protections.
"The feedback I am receiving from financial counsellors is that there are very stressed people in precarious financial positions due to losing their jobs because of the restrictions caused by the pandemic.
"Some of these people are on visas so they cannot access Government financial support.
"These people are being targeted by credit lenders through unsolicited contacts.
"To coin a phrase used by one counsellor, 'a payday loan without a pay day is a recipe for disaster'.
“The Government has dropped the ball on these important reforms.
“Nobody is seeking to eliminate small amount credit contracts because we recognise there is a place for them.
“However, all Centre Alliance wants is better protections for people who use payday loans and consumer leases.”
Consistent with the Government’s exposure draft legislation, the Centre Alliance Private Member's Bill seek 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.