Concerns over payday lenders offering coronavirus relief loans
Peter Fife admits he’s partly to blame for getting himself into financial trouble, but he still feels that the payday loan companies that have provided him with high-interest loans should take responsibility as well.
- Financial advisers say there has been an increase in the number of payday lenders texting offering loans during the coronavirus crisis
- Peter Fife says he was “stalked and harassed” by payday loan companies
- Industry rep Haydn Cooper says issues with these companies have been exaggerated
“I dug the hole, but they gave me the shovel,” he said at 7:30 am from his home in Innisfail in far north Queensland.
The disabled pensioner had paid off a payday loan in early April, but a few days later received text messages offering him “COVID-19 relief loans.”
“How come I am harassed and harassed by these payday lenders? This has never happened to me before,” Fife said.
“Peter didn’t need a big loan, he needed $ 50 for basic groceries,” said financial advisor Conrad Dwyer of the Native Consumer Assistance Network.
“I don’t think that’s what we want, where people look to these kinds of businesses to take out small loans, but then go into significant debt over the course of six months.”
“Like taking advantage of a very bad situation”
Financial advisers said at 7:30 a.m. that they had had numerous reports of a spike in targeted messages from payday lenders in the past two months.
“We’ve heard a lot of this kind of activity happening,” Belinda Watson, of the Logan-based YFS community group, said at 7:30 am.
“It’s almost like taking advantage of a really bad situation.”
But one of the organizations representing small, short-term lenders says the COVID-19 shutdown has been bad for business.
“Our members have actually reduced new loan revenue by about 30 percent,” said Haydn Cooper, president of the Financiers Association of Australia.
He accused consumer groups of drawing attention to extreme cases that exaggerate the problems with payday loans.
“I would say all of the claims made by consumer advocates about what’s going on in the industry are in fact, mostly anecdotal,” he said.
Payday lenders offer small loans of up to $ 2,000 and, under Australian law, are permitted to charge a set-up fee of up to 20% of the amount borrowed and a monthly service fee of up to 4%. .
But some of Mr Fife’s loans were taken from a company called Cigno, which Australia’s business regulator ASIC accuses of exploiting a loophole to charge much higher fees.
ASIC is currently using its power to the detriment of the public to shut down Cigno.
Mr. Cooper says Cigno does not represent the industry.
“Cigno has really damaged the reputation of the industry, [but] in every industry in the world there are people who will push the boundaries of what is normally considered correct, ”he said.
“I get two or three a day”
Customers of other payday lenders have also complained about aggressive texts and emails during the COVID-19 crisis.
“I usually get about two or three a day – sometimes every hour,” said Aaron White of Kingston, south of Brisbane.
Mr. White is currently paying off four payday loans with the help of a financial advisor and has successfully resisted the temptation to take out another.
“As far as the loans go, I’m doing a lot better. I see the signs and I’m like, hey wait, I don’t need the money and I can’t afford to pay it back.”
Consumer advocates are worried about what happens when government welfare during the COVID-19 crisis runs out later this year.
“It’s a ticking time bomb,” said Katherine Temple, of the Consumer Action Law Center.
This highlights a private member’s bill, currently before the Senate, that would limit the amount a person can borrow from payday lenders and ban unsolicited texts.
Mr. Cooper says the proposal is overkill.
“If you were in a restaurant and you couldn’t email or text your customers, your diners, to come over for another meal for two years, how long do you think these businesses would last? ? he said.