Good Shepherd Microfinance today welcomed the federal government’s discussion paper on payday lending, which aims to improve access to low-cost and fairer financial systems for Australians on low and limited incomes.
Adam Mooney, CEO of Good Shepherd Microfinance, said it was pleasing to see the Government recognised the impact payday lending has on the community and the economy.
‘Good Shepherd research, cited in the discussion paper, shows how payday lenders are making money from vulnerable people and worsening their experience of poverty,’ he said.
The government’s discussion paper on payday lending seeks to reduce the need for pay day lenders by improving access to fairer alternative financial services, as well as improving assistance provided to those stuck in the payday lending debt cycle.
Mr Mooney said that reform was crucial to help Australians who are financially excluded from mainstream financial services and protect those who are most vulnerable.
‘Good Shepherd research showed that welfare recipients are using payday lenders to meet regular living expenses and are then trapped in a debt spiral continuously indebted to one or more loan companies for considerable periods,’ he said.
“Repeat borrowing is a frequent occurrence with borrowers ending up paying the equivalent of annual percentage rates between 700 and 1,200 per cent over several months.
Mr Mooney said that payday lending had been born out of the demise of credit unions in the 1990s, with the industry seizing a gap in the marketplace.
‘There is huge room for improvement to the system and great scope to increase programs that offer safe, affordable and small loans credit, including ensuring that the mainstream financial system and structure was adequate for all Australians.’
Good Shepherd Microfinance
Good Shepherd Microfinance provides a range of services for Australians who are excluded from mainstream banking. These include the No Interest Loan Scheme (NILS), StepUP Loans, and the AddsUP Matched Savings Program. Good Shepherd Microfinance works in partnership with National Australian Bank, the Federal and State governments. Over the past five years Good Shepherd Microfinance has assisted over 60,000 Australians with no or low cost interest loans.
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