Labor’s Shadow Assistant Minister for Families and Communities Senator Louise Pratt joined Federal Member for Newcastle Sharon Claydon Newcastle today for community discussions about the serious and growing problem of payday lending and rent-to-buy schemes in the Newcastle-Hunter region.
The Federal Labor representatives met with Samaritans CEO, Brad Webb, and Chair of the Financial Counsellors Association of New South Wales, Graham Smith, to discuss the local impacts of payday lending and rent-to-buy schemes on vulnerable consumers.
Ms Claydon said meeting reinforced concerns she was hearing from constituents about the behaviour of some of these organisations.
“I’m hearing too many stories of constituents getting caught up in a spiral of debt and despair after taking out a payday loan. The Turnbull Government needs to act urgently on this issue.
“It was incredibly sobering to learn that the majority of people seeking financial counselling in our region have taken out payday loans.”
Senator Pratt called on the Turnbull Government needed to fast track legislation to protect consumers.
“In November 2016 the Turnbull Government committed to a suite of reforms in response to a review of the Small Amount Credit Contracts (SACC) Review, promising to introduce legislation in 2017,” Senator Pratt said.
“They even put out a Draft Consultation Bill in October last year, but since then intense lobbying from the industry and internal division has brought progress to a standstill.
“In a brazen act of defiance, a rogue group of Government members has even set up a ‘Parliamentary Friends of Payday Lenders’ group, to send a warning to the Prime Minister against progressing the legislation.”
Senator Pratt said Labor had been forced to introduce a word-for-word copy of the Government’s Draft Consultation Bill into the Parliament in the face of Government inertia.
The legislation 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;
“This issue could be fixed within weeks, but we need the Government will need to stand up for vulnerable consumers, not vested interests and the right wing fringe of his party,” Senator Pratt said.