Editorial: Payday lenders must be called to account

THE shadow banking system of micro-lenders needs to be reined in before too many more people are hurt. This is not Government meddling, but ensuring the right checks, balances and regulatory oversight are in place, writes the Editor.

Government control of micro-lenders is not meddling but protecting the vulnerable.

• When you can’t dig your way out of debt
• ANALYSIS: It’s time to stand up to payday lenders

THE old term “usurer” is, in more modern parlance, a shylock or loan shark. In contemporary Australia, you could substitute “payday lender”.

What we are dealing with here is an under-regulated corner of the financial services sector that, in many ways, mirrors the dodgy loans offered by some pawnbrokers in years past. The difference is that instead of hocking a wedding ring or television set for some fast cash, you are in effect pledging a large part of next month’s salary.

Pawnbrokers provided a way to raise some quick cash but under-regulated usurers are exploiting the most vulnerable.

As The Courier-Mail reports today, the industry is rife with sharp practice, with some unscrupulous lenders exploiting the most vulnerable in our community who end up in a spiral of revolving high-interest loans and ever increasing debt.

What is almost as disturbing as the predatory behaviour is the fact that the Turnbull Government promised new legislation that would dramatically improve consumer protection, yet these laws have been effectively derailed by backbenchers worried about “nanny state” intervention in the sector.

Two years ago, the Government received a review highlighting problems in the sector which, according to Digital Finance Analytics is expected to reach about $2 billion in size this year, warning of the problems. Financial Services Minister Kelly O’Dwyer is yet to act. Meanwhile, horror stories of consumers taking out loans to repay loans, and being offered unsolicited credit despite a clear inability to repay, continue to mount.

It is understandable that the Government wants to take some time to get the legislative changes right, particularly given that there is a solid case to be argued for honest honourable lenders who can offer micro-loans, or Small Amount Credit Contracts.

These are the sort of emergency, short-term, tide-me-over loans that borrowers seek for unexpected expenses such as car repairs, medical expenses or an overdue power bill. To strangle the sector completely with legislation could mean that many Australians who legitimately need small amounts of money in a hurry – often the sort of loans that the big banks just don’t consider worth their while – are denied the opportunity of finance.

Horror stories abound of consumers taking out loans to repay loans, and being offered unsolicited credit despite a clear inability to repay.

At a time when wages growth is at a record low and household income is falling in real terms while cost of living expenses such as health care and electricity are soaring, blocking legitimate emergency finance to those in need would be unfair.

Leaving them open to exploitation is not fair either, in fact it would be an abrogation of responsibility.

These are not insurmountable issues, and much of the legislation being broadly proposed would build on changes introduced by the previous Labor federal government, most recently the Consumer Credit Legislation amendments of 2012.

The point is that right now there are thousands of Queenslanders in dire financial hardship as a result of entering into loans – sometimes unsolicited, or extended despite poor credit history – that carry interest rates, high establishment fees and ruinous penalties for late repayment.

In a climate where public mistrust of the financial services sector has risen to such levels of odium that the big banks themselves requested the Government establish a commission of inquiry to clear the air, this part of the industry is deserving of at least closer scrutiny and legislative intervention.

This is an industry that has managed to reinvent itself and its offerings every time it comes under scrutiny, with the big push at the moment being the growth of online lending which spreads the net well beyond the lower socio-economic demographics, to wealthier but still cash-strapped households.

In effect, it is a shadow banking system of micro-lenders, many of whom operate with cavalier disregard for the interests of their clients, and one that the Government needs to rein in before too many more people are hurt.

This is not meddling, but ensuring the right checks, balances and regulatory oversight are in place for an industry sub-sector that for too long has viewed its customers in the same way a vampire would regard a carotid artery.

DUNDEE DESERVES ANOTHER RUN

IT HAS been more than three decades since Mick Dundee (aka Paul Hogan) introduced us to the joys of wrangling crocodiles, what constitutes a real knife, and how to hypnotise a buffalo.

A return to Walkabout Creek is long overdue, certainly if the response to an all-star faux trailer – featuring Chris Hemsworth and Margot Robbie – is anything to go by.

The $5 million Crocodile Dundee themed campaign is expected to be aired as an ad during today’s Super Bowl, but the tease here is almost too much. This is the sort of “trailer” which would have cinema-goers booking seats for the movie in advance.

Our sister newspaper the NT News has started a petition calling for a reboot – and we’re on board. In an era when we wage culture wars over flags, clothing, statues, national dates and even what sort of jokes are acceptable, a return to the gloriously laconic humour of Dundee would be a breath of fresh air.

To paraphrase Mick Dundee, arguing over all this nonsense is like two fleas arguing over who owns the dog they live on.

The petition is at bringbackdundee

Responsibility for election comment is taken by Sam Weir, corner of Mayne Rd & Campbell St, Bowen Hills, Qld 4006. Printed and published by NEWSQUEENSLAND (ACN 009 661 778). Contact details are available at couriermail.com.au