REPORTS of payday lenders cold-calling Ceduna residents as a result of the cashless debit card trial has prompted a warning from Senator Skye Kakoschke-Moore about the pitfalls surrounding payday lenders.
The Nick Xenophon Team member was in Ceduna this week to speak with people who have been contacted by payday lenders, as well as mayor Allan Suter.
Ms Kakoschke-Moore said Ceduna community members had come forward to say loans of $2000 were being offered with a 65 per cent interest rate and an application fee of up to $400.
She said payday lenders were targeting vulnerable people, including those on the cashless welfare card.
“They are targeting people they know have limited financial means who have a high possibility of getting trapped in the debt cycle,” she said.
“I have heard in the past they have been cold calling or going out to communities but now with internet access and bombardment of advertising it is easier for people to seek out these loans.
“The impression I have from my visit is payday lending has been an issue for a while and is not getting better.”
She said there were alternatives available including a StepUP loan of up to $3000 with a low interest rate, or the No Interest Loan Scheme, for up to $1200.
“Those in need of short-term loans feel the payday lenders are the only possible option but there are alternatives,” she said.
Ms Kakoschke-Moore plans introduce a Bill in Federal Parliament aimed at better protecting consumers against “predatory” payday lenders.
“The Bill is to mirror recommendations made by the recent independent review into consumer leases and payday loans in order to implement better consumer protection,” Ms Kakoschke-Moore said.
“Changes I’d like to see include capping repayments at 10 per cent, stamping out of commission being paid when one loan provider rejects a customer and refers to another and capping of default fees.”
Ms Kakoschke-Moore said education surrounding payday lending must improve.
“The Bill is a step in the right direction and will put lenders on notice that their conduct is being reviewed,” she said.
“Other things to be done includes improving financial literacy in the region.
“The cashless card can help fix some things like with alcohol but it can’t fix everything and education helps fill in gaps.”
She said people should seek help if they were struggling financially.
“There are places to seek financial counselling and there are advocates to help,” she said.
“You don’t have to suffer in silence or be embarrassed.”
Ceduna mayor Allan Suter praised Ms Kakoschke-Moore for generating publicity on this issue.
“The senator has helped us get attention paid to the issue,” he said.
“Thanks to the publicity generated the lender association representatives have been in touch to see what can be done.”
Mr Suter said people getting caught in the debt cycle was the “big and obvious danger” of payday lending, but the Bill would help curb some of the problems.
Ms Kakoschke-Moore said people should approach these types of loans with a “high degree of caution” and remember there were safer alternatives.
“You don’t need to go to a lender for essential household items or car repairs.”
Anybody affected by this issue can contact Ms Kakoschke-Moore’s office on 8232 0220 or by emailing firstname.lastname@example.org