Senate Inquiry into payday lenders and ‘debt vultures’ announced

On 18 October, the Australian Senate voted to establish an inquiry into unregulated debt management firms, which target customers with debt problems.

The Inquiry to be undertaken by the Senate Economics References Committee will investigate debt management firms, the impact of payday loans, rent-to-buy leases and “buy now, pay later” credit, following calls from consumer advocates to address the lack of regulation in this financial sector. 

'Debt vultures' target people concerned about bills, home repossession or the confusing credit reporting system and they promise a quick fix ‘debt solution’. In reality, however, they charge exorbitant fees, can’t deliver on many of their promises, and leave financially struggling families with even less money.

Shadow financial services spokeswoman, Clare O'Neil, said the Opposition wanted to stop people entering a "spiral of debt" from expensive payday loans, and the inquiry would look at the financial counseling sector's capacity to service this part of the community.

"It is clear to me that there are a range of providers whose conduct was not examined by the banking royal commission who provide financial services to vulnerable Australians,"  Ms O'Neil said.

Source: Consumer Action Law Centre and Sydney Morning Herald.