Federal Labor is calling on the Government to stop stalling and get on with the job of protecting 650,000 Australian families who are being ripped off by pay day lenders.
Federal Member for Hunter Joel Fitzgibbon MP said it was time Government Ministers stopped sitting on their hands and did something about this growing financial epidemic.
It has now been almost 2 years since the Government received the report and recommendations from their own small amount credit contract (SACC) laws committee and they are yet to show any significant support to vulnerable Australians who are being taken advantage of, Federal Member for Hunter Joel Fitzgibbon said.
The Governments own report found examples where families are paying more than $3,000 for household goods like a clothes dryer that would normally cost just $345. Thats equivalent to an interest rate of 884 per cent which is just unacceptable.
We must put a stop to pay day lenders taking advantage of families and households through these outrageous interest rates.
In the Hunter electorate a number of charitable community organisations have reported significant numbers of people under financial stress due to pay day lender loans. Families living week to week, already struggling with high power prices and stagnated wages are being targeted by the quick fix loan companies and are falling into a deeper financial trap.
The ease of taking out a pay day lender loan and a failure to take into account a persons ability to pay back the loan means financially vulnerable people are suffering, Mr Fitzgibbon said.
Those on very low incomes have little capacity to absorb financial shocks, such as a washing machine breaking down, a bout of ill health leading to work absenteeism or a parking ticket. With little disposable cash after the bills are paid and with little savings put away for a rainy day, one of the obvious options is a pay day loan.
Despite an announcement by the Minister for Revenue and Financial Services Kelly ODwyer in November 2016 stating support for the vast majority of the recommendations from the committee, the Government is yet to introduce legislation to clean up the industry.
A recent report from the Consumer Action Law Centre also showed that 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 the average number of loans per loan borrower is 3.64.
The Minister has already said that the Government supports the vast majority of the recommendations, in part or in full, so its time we saw some action to protect vulnerable Australian families, Mr Fitzgibbon added.
Mr Fitzgibbon encourages locals experiencing financial stress to reconsider taking out a high interest pay day lender loan and to seek out alternative options.
We are fortunate to have a number of organisations in the Hunter electorate that offer financial counselling, hardship support and options for low interest loans. Contact my office for more information on these services, he said.