A not so surprising but alarming snapshot has raised concern about the increase in pay day lending and the vulnerability of those accessing and getting caught in a debt trap.
It has been revealed that pay day lenders are preying on the most vulnerable members of our community. Denis Nelthorpe, Chief Executive Officer of local community legal service WEstjustice, has revealed that in a group of 35 clients who are patients of a mental health unit, 8 had pay day loans.
Mr Nelthorpe stated: “I am concerned that 23% of this sample had engaged with a pay day lender and I am worried about the preying nature of these lenders on our community’s most vulnerable.”
These loans are marketed as a quick and easy fix – but the reality is quite the opposite. In 2015-16 620,000 new payday loans were made, with over $475 million advanced. 40% of people who entered into a Small Amount Credit Contract loan were unemployed, and 25% received more than 50% of their income from Centrelink. Concerning, nearly 40% of borrowers had more than one payday loan in a twelve month period, and 30% had two or more concurrent payday loans.
Pay day lenders have both a physical and online presence, making it easy for individuals to undertake these deceptive loans. In Werribee, there are four pay day lenders within a 500 metre radius of the Werribee train station. The 3030 postcode which encompasses Werribee, Werribee South and Point Cook has been identified by the Consumer Action Law Centre as the 9th highest hotspot for pay day lenders in Victoria.
The presence of pay day lenders online has increased in a dramatic rate. In 2015, 48% of loans were initiated online. Now, it is estimated that 75% of loans are originated online, demonstrating a significant increase. Anyone watching free to air TV will have noticed an increase in flashy advertisements.
Labor’s Shadow Minister for Consumer Affairs Tim Hammond MP and Milton Dick MP introduced a Private Member’s Bill to reform payday lending and rent-to-buy laws known as Small Amount Credit Contract (SACC) Reforms. This Bill would implement reforms in the interests of improving protections for vulnerable consumers of pay day lenders and rent-to buy schemes.
“It is hard to imagine the added layers of stress and anxiety being caused to our most disadvantaged when I contemplate their illness compounded by a debt spiral.
This snapshot in Werribee raises questions about the prevalence and impact of pay day lending across the country and is worthy of further research” said Ms Ryan.
WEDNESDAY, 11 APRIL 2018