A SWAN Hill financial counselor has called for increased regulation and monitoring of the payday lending industry, claiming it’s being allowed to prey on disadvantaged locals.
The government is due to conduct a review into payday lending regulations in the second half of this year.
It last implemented measures to crack down on the industry in 2013, including a maximum 20 percent upfront fee for short-term loans varying between a few hundred to $2000 and maximum 4 percent per month interest rate.
However, Mallee Family Care (MFC) financial counselor Kaylene Birch said locals have ended up having to pay annualised interest rates of up to 200 percent after defaults and extensions.
This has resulted in a cycle of repeat borrowing, as repaying one loan causes so much financial stress a recipient needs to take out another loan to cover it.
Ms Birch said there needed to be some way of monitoring payday lender behaviour and bringing interest rates and fees back to normal market regulations.
“Payday loans are designed to look simple and they target people who are already under a great deal of financial stress,” she said.
“I’ve not been able to find anything that monitors how they are able to promote themselves.
“The other thing is they don’t do budgets with our clients, or not accurate budgets, so maybe they need to get some more support information to prove that our clients can actually maintain that loan.”
For more on this story, grab a copy of Monday’s Guardian (June 22).
Anyone seeking financial counselling support can call Mallee Family Care on 1800 632 263.
