The need for urgent law reform to protect consumers from unfair and predatory payday loans has been reinforced at a meeting of Australian and New Zealand ministers in Queenstown, New Zealand.
Ministers from every Australian state and territory used this critical forum to publicly call for immediate action to address the harm caused by the payday lending industry. A joint communique released by members of the forum reads:
Ministers recognised that Small Amount Credit Contracts are offered by lenders in a manner that often places greater financial hardship on those whom they are intended to assist. It was noted that reforms to Small Amount Credit Contract regulation is needed to address the harms caused by payday lending and to better promote financial inclusion for those that use them.
State and Territory Ministers acknowledged that urgent action is needed, particularly now that Small Amount Credit Contracts are being provided through cash loan machines and online.
The Stop the Debt Trap alliance, a coalition of over 20 consumer advocacy organisations from around Australia including financial experts, support workers and grassroots community groups, welcomed the announcement.
The alliance was launched last week in response to 1,000-days of inaction since the Coalition Government accepted the recommendations from the Small Amount Credit Contract (SACC) review.
“The Stop the Debt Trap Alliance welcomes the ministerial acknowledgement that we need law reform. The Morrison Government should capitalise on the momentum generated by the Banking Royal Commission and should look to address the harm caused by other financial products, such as payday loans, and progress these reforms as a matter of priority,” says Consumer Action Law Centre CEO, Gerard Brody.
“Protecting vulnerable Australians from getting trapped in a cycle of debt should go hand in hand with implementing the recommendations from the Royal Commission. We welcome Minister Sukkar’s acknowledgement of the harm caused by this industry. Now we look forward to welcoming his action,” he said.