with Payday Loans write the intent was usually clear. That’s not what’s happening. FIONA GUTHRIE. Thanks for coming along on this beautiful Melbourne day to talk a, about payday lenders and to quantity of 15 per cent of their income to live on.
FINANCIAL COUNSELLOR I had a client that had, ah, 3 loans with this lender.
It was a quite lower income, it was a wage. That said, this person was on a pretty rather low income. Some information may be searched for quickly by going online.a number of its customers have incomes of less than $ 38000 a year. Oftentimes sTEPHEN LONG. Notice that cash Converters’ default position is to allow 15 per cent of income for substantial living expenses after housing. Anyways, ah, 15 per cent for living expenses.
PETER CUMINS. Did you know that the amount that’s left over. STEPHEN LONG. Do you reckon that’s unrealistic? That said, fifteen percent for living expenses doesn’t sound like much. FIONA GUTHRIE. It is that should have to cover your own food, our own electricity, your gas, our own transport including car repairs and car registration, your own medimedical expenses and anything else that came up that was unforeseen in that week. That’s impossible. Consequently, it’s outrageous. They’ve still got this fiction that people’s living expenses are 15 per cent as a benchmark. Nonetheless, sTEPHEN LONG. Fiona Guthrie has waged a long battle with the payday loan sector. Then, hi.
How have been you going? FIONA GUTHRIE. STEPHEN LONG. During our course research for this program, she received a hostile call from its industry association. FIONA GUTHRIE.may be more in your own court than in ours, Know what guys, I tend to think. With that said, I had a mobile phone buzz from the payday CEO lenders’ peak body previous week and he was interested to understand about 5 Corners program. Notice, fIONA GUTHRIE. Governmental Government was quite uncertain at moment, that was usually very true. What he said to me in that call was this. He as well said that our involvement with the program could twist back on pecuniary counsellors and there should be unintended consequences. Commonly, oh, look, I thought that was pretty clear.
I ok that to mean a really direct threat that they should lobby against our continuation funding to provide support solutions that we provide to the ‘frontline’ pecuniary counselling solutions all around Australia.
FIONA GUTHRIE.
Canberra saying, Do not fund this organisation. Phil Johns has been civil CEO Credit Providers Association, that represents payday lenders. He said it should not assume to anyone that pecuniary Counselling Australia’s funding be withdrawn. Known sTEPHEN LONG. Payday lenders accuse fiscal counsellors of unfairly sullying industry’s name. Why does payday lending business have this type of a terrible reputation? You should make this seriously. In my view, it’s since consumer activists get the pretty very bad examples and promulgate those as thoughas though that’s what happens in nearly any case. Now pay attention please. PETER CUMINS. Nevertheless, sTEPHEN LONG. Some amount of fiscal concerns counsellors are backed by a brand new ASIC report. Nearly 2 thirds were extremely gonna breach responsible lending laws.
7 per cent gave a really new loan to someone in default.
More than half gave loans to people who always had multiple loans.
It looked at 288 files from lenders covering 3 market quarters. Completely one lender had evidence to justify why they’d approved the loans. We’re not getting a clear message as to why they think, in a lot of circumstances, it’s right thing to do to provide further credit. PETER KELL, DEPUTY CHAIR. On p of this, when we’re talking about vulnerable consumers on quite low incomes, that’s not good enough. STEPHEN LONG. Some info will be searched with success for readily online. At Odyssey House in Melbourne, pecuniary counsellor Garry Rothman helps recovering drug addicts get back on track. We’ve got a couple of debts waived.
GARRY ROTHMAN, FINANCIAL COUNSELLOR, ODYSSEY HOUSE.
STEPHEN LONG.
Day he’s meeting a junior man who we’ll call Max. GARRY ROTHMAN. Max, the, debt that you had with Nimble is referred to a debt collector and I’ve written to them. STEPHEN LONG. Now wholesome, free of drugs and planning to university, he’s still plagued by payday loan debts from when he was using, in 2013. Anyways, max is usually a recovering heroin addict who suffers ‘bipolar’ disorder. Therefore. I was virtually rather sick at that point during my existence with, um, addiction and mental health problems. I started resorting to payday lenders to, to fund my addiction. MAX. My lowest in they was homeless. I was, ah, either sleeping in my car or ‘li living’ in boarding houses and, um, I felt that health was so miserable that -and, and hopeless and they didn’t see a way out -that it was, it was a regular sort of mission or struggle to just blackish myself out any day., beyond doubt, I was spending… about $ 200 a day on heroin.
Yeah. I’d get a payday loan and it will be gone. In active addiction, Max ran up thousands of dollars on payday loans and pawnbroker loans. STEPHEN LONG. Consequently we went to another counter, sort of wards the shop front, and they got a payday loan from them as a result. Furthermore, I went to, um, Cash Converters and we hocked a bunch of my items for, for money. MAX. Obviously I was struggling financially andand desperate.. With that said, they understood you were absolutely desperate for money. Known you merely walked up to another counter and they gave you a payday loan? They ok our own goods. Nevertheless, sTEPHEN LONG. STEPHEN LONG. It doesn’t look highly good when someone who’s addicted to heroin and in fiscal distress was probably pawning their goods at one counter and getting a payday loan at another. I accept. They don’t mostly come in and declare that to staff member. PETER CUMINS. You’ve got to remember that a staff member can’t be expected to see whether somebody is usually a heroin addict or not.
GARRY ROTHMAN.
Max’s situation has always been one that we see over and over again.
Ah, our experience is that probably 80 per cent of people who are living an essence like him should have payday loans. GOOD2GO WEBSITE PROMOTIONAL VIDEO. She needs cash now. Good2Go Loans has usually been a breakaway from City Finance and it apparently sees drug addiction as no barrier to getting a loan. This is where it starts getting serious. STEPHEN LONG. In reality, 5 Corners met with a whistleblower from Good2Go Loans who revealed this practices payday lender. Needless to say, we’ve used an actor to voice her concerns, with intention to protect whistleblower. Someone will come in and you will see that they’re visibly affected by drugs. GOOD2GO WHISTLEBLOWER. It’s way they stand and they slur their speech. I mean, you usually can see it in their eyes. For example, they will get in all the good documentation.
They’ve got their ID and they’ve got their bank statements with them. It’s prepared for you to go. My concern was always that this person is affected by drugs, I would approach my supervisor and we will say, the loan stacks up. Write it up, as long as the loan stacks up. To be honest I should be told. Hey, do not worry about it. Still, they get a loan. I I’ did have someone come in and they had multiple payday loans with additional lenders and it’s clear that they’re, they have a gambling issue as long as there have been online gambling payments on their bank statements. Illiterate. I’ve had people come in who probably were illiterate. Yep, To be honest I still wrote loan. Seriously. I’ve had to show them letters to type in to write, I’m almost sure I accept. Oftentimes hi, so that’s Tracy calling from Good2Go Loans. How were always you? You see, gOOD2GO LOANS EMPLOYEE. In a disturbing revelation, insiders ld 3 Corners that Good2Go routinely overlooking contracts after they’ve been signed -and we’ve seen evidence of this. STEPHEN LONG. It’s a bait and switch.
Sidestepping caps on fees, good2Go signs people up to ‘1 year’ loan deals that aren’t regulated by ministerial laws. While outlining a brand new payment plan, it sends the customer a text message. The payments have probably been $ 72 fortnightly with first payment 03/02/Any questions please call G2G Loans. Of course dear Andrew Acceptance received. Finances gonna be settled within next 24hrs. SMS MESSAGE. Now let me tell you something. Well, loan contract will say that the loan’s for 104 weeks. We send them a SMS saying their newest loan repayment amount. You should make this seriously. GOOD2GO WHISTLEBLOWER. With all that said… Therefore 99 per time cent that doesn’t happen. Generally, I accept, we review it on them, right after they email back saying. For example, and, you understand, they’re hoodwinked. They might’ve signed a contract saying that they’ve been intending to repay $ seven or $ ten a fortnight. Keep reading. They most likely miss payments, they weren’t expecting that kind of repayment, payments possibly bounce and later come a whole range of dishonour fees.
STEPHEN LONG. Whether you a solution or not, a $ seven charge per call; $ 27 dot 50 to send a letter to client; and a $ 50 direct debit fee simply for taking money from your account, multiple fees involve a $ seven charge for sending a client a text message. We raised our concerns with ASIC’s deputy chairman. You usually can see there. Ok, and now one of most essential parts. I’d like to show you a contract from a company called Good2Go Loans. As a result, they’ve charged $ 250 as an establishment fee -that’s 50 per cent of the loan cost. It’s a ‘quite short term’ loan, we’ve been ld by insiders that in virtually all cases the loan is written as being 104 weeks and immediately the repayments always were changed, they are usually purporting that this loan is since we obviously don’t need to see people attempting to game the rules, either by manipulating the loan length or by manipulating the sorts of fees and charges that, um, ah, that people have to pay, including the establishment fee. It’s a well sTEPHEN LONG. Usually were there dodgy players in industry? PETER CUMINS. I think there been over past. Nonetheless, have probably been there still dodgy players in the industry? Now pay attention please. STEPHEN LONG. Considering the above said. STEPHEN LONG. He said he was not prepared to comment at this stage, we tried to speak to Mr Bousfield. Then, Good2Go CEO Loans, Jason Bousfield, has probably been on board of the civil board Credit Providers’ Association, peak body for payday lenders. ASIC has been investigating Good2Go Loans, after been alerted by our Corners. I’m sure you heard about this. Another pops up, whenever it knocks down one scam.
At ASIC’s headquarters in Sydney, there’s a whole team cracking down on payday lenders -but it’s like game such as regulatory ‘whackamole’.
That they may charge a higher price to a lot of most vulnerable members of our community, to get around caps on fees where they have existed, ah, the payday history lending industry was always, unfortunately, a history of lenders who have tried by whatever means doable to get around consumer protections that was in place.
PETER KELL. Of course julie’s got 4 kids and a tribe of doting grandchildren. She’s a pensioner who lives near Penrith in far western Sydney. STEPHEN LONG. She’s as well lead plaintiff in class action litigation against Cash Converters. Then the payday lending giant may be forced to compensate more than 50000 people like her, if it succeeds. Virtually, sTEPHEN LONG. JULIE GRAY. Nonetheless, whenever having to go and get loan after loan, Well, I’m doing it also for myself but there’s a bunch of people out there, I suppose, that have usually been in identical situation as I am, that got caught up in the whole spiral thing.
STEPHEN LONG.
Julie battles ill health.
She spends up a massive chunk of a little income on medicine and medic bills., I’ve got a hip specialist that they visit. A well-famous fact that was usually. JULIE GRAY. After my rent and.. Which. Um, um, electricity and bills and that usually were paid, I believe I’m left with $ 320. STEPHEN LONG. With that said, julie Gray can’t remember what first ok her to Cash Converters at Penrith. BEN SLADE, LAWYER, MAURICE BLACKBURN. That was probably her intention, when Julie Gray went into the Penrith Cash Converters store to take up $ 100. Normally, she needs to go back in and get another $ 100 and after that an individual loan for $ it’s really shortly after that she needs to go back in and get another $ 100 cash loan and another special loan. It’s extremely quickly after that that the instalments that she makes out of her credit card leave her with nothing. Now look. After that, over and over again and more and more and, until she’s looked for herself in an impossible situation.
STEPHEN LONG. At the time, maximum payday lenders could charge customers in modern South Wales was 48 per cent a year, including all fees and charges. What Julie didn’t understand was that she was successfuly paying Cash Converters more than 13 times that limit. BEN SLADE. Between 2010 and 2013, there was a 48 per cent maximum annual percentage rate cap in NSW. We’ve got 3 class actions that we’re running that allege that Cash Converters avoided that cap by a mechanism that was, we say. Julie, so that’s one of our own loan documents from Cash Converters. Now please pay attention. STEPHEN LONG. Now pay attention please. Now, a mechanism related to loan switch Good2Go now employs. STEPHEN LONG. Seriously. BEN SLADE. For cash loans, So if they had included it, it was 633 per cent per annum and for private loans it was 145 per cent per annum. STEPHEN LONG. What’s your own view on the class action being taken against Cash Converters in NSW? Consequently, pETER CUMINS.
Ah and that’s my individual opinion. I personally don’t think their claim has merit. DAVID FAWCETT, SENATOR, CHAIR, PARLIAMENTARY JOINT COMMITTEE ON CORPORATIONS AND FINANCIAL SERVICES. While managing director of Cash Converters inter-national Limited, peter Cumins. In a submission to a Parliamentary committee considering governmental legislation, Cash Converters admitted to avoiding 48 per cent interest rate cap in NSW. STEPHEN LONG. By the way, the reality has been that all ‘shortterm’ lenders have in place mechanisms to ensure that they receive a return greater than 48 per cent annualised cap imposes on them. CASH CONVERTERS SUBMISSION. Consequently, that’s a contract for a cash advance. It’s a well sTEPHEN LONG. STEPHEN LONG. Those mechanisms pushed Julie Gray into a spiral of debt and depression. Ashamed.
To be honest I simply felt like, with the depression.
when we started.
I wasn’t worth. Fact, they donno. I suppose. Um, as a parent we was letting my kids down. JULIE GRAY. Often, sTEPHEN LONG. How do you feel about Cash conduct Converters? On p of this, ’cause there should be lots of people out there that my be in identical boat as what I am, in order to think that they may make advantage of people like me. In any case, jULIE GRAY. Let me tell you something. I’m disgusted, to be truthful. PETER CUMINS.
I’m so quite old, I actually grew up in the months when you saved up to acquire something.
Whenever working in industry, um, bank statement and their spending patterns, it should assume that plenty of people spend everything that they earn, So in case you look at somebody’s.
What you’ve got to be advised, To be honest I guess, is that lending at, at this level has probably been a, um, has always been a symptom, not a cause. Whenever earning enough to save is probably a distant dream, for a lot of who turn to payday lending. STEPHEN LONG. Research shows that most payday loan customers use money to pay for substantial needs, like food and rent. Remember, it’s a world of poverty level welfare, where people shuffle in and out of insecure jobs. In a lot of ways, payday lending always was a product of solutions society has made about how to deal with those in fiscal hardship. FIONA GUTHRIE. By the way, the reason that we’re seeing a lot of people desperate for payday loans, quite ‘lower income’ people, usually was that our community security safety net was usually so rather low. Consequently, if you don’t have enough money, week to week to week, and you have an unexpected expense just like children going back to school, where do you go?
GOOD SHEPHERD CUSTOMER SERVICE WORKER.
Hi.
How are you? GOOD SHEPHERD CUSTOMER SERVICE WORKER. This probably was the case. You’re here for the interview for a ‘stepup’ loan? Basically, gOOD SHEPHERD CUSTOMER SERVICE WORKER. All right, should you. Look, there’re alternatives to highcost payday loans. STEPHEN LONG. Get a seat. Ultimately, gOOD SHEPHERD CUSTOMER SERVICE WORKER. STEPHEN LONG. 6 hundred and fifty maintenance nationwide offer ‘noor’ lower interest loans through Good Shepherd Microfinance. There’s a lot more info about this stuff here. It’s Ty from the Good Money Store here in Geelong. TY, CUSTOMER SERVICE CALLER. Let me tell you something. Hi. STEPHEN LONG. So, not for profit even runs its own Good Money shopfronts. Oftentimes perfect. CUSTOMER SERVICE CALLER Yeah. Perfect. STEPHEN LONG.
It give gives loans for essential goods like furniture or fridges and outsourcing like dental bills and education.
GOOD SHEPHERD CUSTOMER SERVICE WORKER.
I think you’re a previous step up customer? CHRIS FOUNTAIN. That is interesting right? I have. That was extremely helpful with that, that was stolen. STEPHEN LONG. I got slightly crook Friday and they spent the weekend in bed. Notice, monday morning, car gone. What happened after that. CHRIS FOUNTAIN. Yeah.
Now I’m in here day to get a loan to do whatever we do in my art existence or my individual health, whatever they look for to do.
Moving away from fiscal cr and hardship to stability, to income generation and longer term resilience.
Our no interest loans programme has, is extremely successful. ADAM MOONEY. We’ve reached 155000 people over last ten years and we see through evidence that 5 5 out of our clients are realising economical mobility. Scheme grew out a tiny program begun by Catholic nuns and is probably now backed by State and governmental Government and a huge bank. On p of that, sTEPHEN LONG. ADAM MOONEY. It’s a well I hear that the providers have usually been relishing talking with us and talking to you guys. NAB offers $ 130 million worth of capital, interest free, to us to do this lending. ADAM MOONEY. I’m sure it sounds familiar. They’ve committed to reach a million people over the next 5 years with us, and they’ve -NAB has made a sensible decision not to bank payday lending sector.
STEPHEN LONG.
Unlike Westpac.
It’s providing debt facilities in millions hundreds of dollars to payday lenders. They are probably the bankers, highly lucrative, ah, bankers to Cash Converters and Money3 -by far 3 biggest providers. ADAM MOONEY. Finally, you have any individual loans at moment, right? GOOD SHEPHERD CUSTOMER SERVICE WORKER. Ok, and now one of the most significant parts. Far, it doesn’t give cash loans and, it’s a write in the ocean with 6 per market cent. It’s limited, the loan scheme provides valuable that owns Cash Train, one of 3 lenders she dealt with.
STEPHEN LONG. ANNA. That’s right! They’re all paid but, um, I actually complained excessive as long as fees and fact that you shouldn’t have loaned them to me firstly, ’cause I couldn’t afford them. ANNA. Now look, the 3 loans that they gave me were all given at times when we had heaps of next payday loans at identical time, and we likewise wasn’t in a position to make most of the repayments without taking out a further payday loan, when I went back and looked at it. Basically, sTEPHEN LONG.
It’s rapidly expanding frontier of payday lending. Anna ok out all of her 27 loans online. I was about to hit the bouncy castle rough. Whoa, what did actually the tunes? MAN IN RABBIT SUIT. As a result. What usually were we intending to do? We had to pay DJ. It is sTEPHEN LONG. As firms like Nimble invite people to live beyond their means and fill the gap with highcost finance. MAN IN RABBIT SUIT. Little loans from $ 100 to $ 1,Once approved, have the money within the hour. Just think for a moment. STEPHEN LONG. Considering the above said. More a case of attempting to keep her head above water, For Anna, payday lending was less about living health big. That said, the ministerial laws usually were up for review midyear. Anna doesn’t see a plain simple a solution or a plain simple way out. I’m under no big illusion that if it’s more tightly regulated, outlawed, there will still be unscrupulous businesses out there that were usually out to make advantage of people who are usually in a vulnerable situation.
ANNA.
STEPHEN LONG.
Is always it good enough that growing numbers of people in Australia who have probably been stretched and on margins are considered fair game? I believe there’re plenty of other people out there in that, that sort of situation. So, as I’ve said before, the biggest thing that I’ve felt about doing that’s shame and isolation. Now look. ANNA. Um, it’s highly a problem to recover from. Um, it merely requires some fiscal misfortune, whatever that should note that the international Credit Providers’ Association, that represents the payday lending industry, refused repeated requests to be interviewed for the program. Obviously, westpac has ld 5 Corners it’s reviewing its due diligence in relation to payday lending firms, in light of ASIC’s critical report. I should likewise clarify that Good2Go Loans, that featured in story, isn’t connected in any way to a program called Good2GoNow, that has always been coordinated by Good Shepherd Microfinance and Good Guys whitegoods retailer. As a result, next week on 5 Corners.
It tells the savage shocking story rape and murder of medicinal student Jyoti Singh and a male culture that still devalues women. India’s daughter, documentary a billion Indians have not been helped to watch. So this service may involve material from Agence ‘France Presse’, APTN, Reuters, AAP, CNN and BBC World Service which is copyright and can’t be reproduced. While doling out loans at one shop end after the addicted person had pawned goods at front desk, reporter Stephen Long spoke to industry insiders who confirmed that lenders provided credit to heroin addicts. Then once more, the questionable practices don’t end there. Will the authorities and Government act to control industry mavericks? All evidence considers the industry is always now expanding massively online. On p of this, whenever meeting people like Anna, as Long tests this claim he uncovers a trail of misery. Whenever sinking ever deeper into debt, taking the money was plain simple, even if he didn’t learn the documents he was signing. I’m sure that the system encourages dependency and windfall gains come not from any one loan by sucking people into multiple loans, from time to time with effective interest rates of more than 300 percent, Anna had discovered what thousands of next pretty short term borrowers again saw. After an intensive industry lobbying campaign laws were watered down but still capped interest and establishment fees. In 2013 governmental Government tried to rein in the industry very bad excesses with newest legislation. So, while claiming it provides a service banks aren’t interested in delivering, the industry defends itself.
