ASIC puts payday lenders 'on notice'

by Adam Smith17 Mar 2015
ASIC has taken the payday lending sector to task over its compliance with the NCCP.

An ASIC review has claimed payday lenders need to improve their compliance with key consumer protection laws. The review found that, while some compliance rules were working, payday lenders were "falling short" of meeting new obligations introduced in a round of small lending reforms in 2013.

"The payday lending sector is on notice to improve its practices, or further ennforcement action is inevitable," ASIC deputy chairman Peter Kell said.

The review of 288 consumer files from 13 payday lenders responsible for more than 75% of the payday loans made in Australia found compliance risks around loan suitability. It also identified concerns where lenders set loan terms for 12 months or more - charging consumers more fees - in instances where consumers had requested shorter loan terms and repaid the loan within the shorter time period.

ASIC said the report also found "systemic weaknesses" in documentation and record keeping in the industry.

"ASIC has a strong focus on the payday lending sector as its customers include some of the most financially vulnerable members of the community," Kell said. "ASIC will use its powers to reduce the risk of payday lenders providing unsuitable loans and to reduce the risk that financially vulnerable consumers get caught in a debt spiral, where new loans are effectively used to pay back old loans."


  • by Mat Smith 17/03/2015 10:12:01 PM

    Here's what's ridiculous: well-meaning officials and activists trying to understand payday loans with a credit-card mentality. These are short term loans, they're not paid off over a year, or with monthly payments like a credit card is, anyone who takes out these loans understands this. People use these loans specifically because they don't have the luxury of a credit card with a nice, politically-correct APR. It's also ridiculous that even with one or even two jobs, some folks still need loans like these to make ends meet. And instead of addressing the need for a living wage, politicians would rather scrutinize the loans people sometimes need to get by.

  • by Maria Rigoni 18/03/2015 12:17:36 PM

    The National Consumer Credit Protection Act was supposed to get the loan sharks who charge over the top fees and interest rates out of the picture. People who understand finance and money traps and inadequate funding options for the vulnerable knew the problem would not be fixed by the legislation.

  • by Doran Waugh 22/07/2015 2:42:35 PM

    Loans have become quite an issue in many states of the country. There are many people under debt and they would certainly like some relief. The debt is mainly due to the increasing rates on them from the lenders. When someone tries to pay back the debt they get hit by huge increased interest rates and that is why they chose to for fit their