Westpac has confirmed it will no longer provide funding to the controversial payday lending sector.
Payday lenders Cash Converters and Money3 have been told by the major bank that they will no longer receive funding and will have to source their finance from elsewhere, the ABC
This comes after Westpac conducted a thorough internal review into payday lending, which has come under scrutiny by ASIC over its compliance with the NCCP.
An ASIC review of payday lending, released earlier this year, claimed payday lenders need to improve their compliance with key consumer protection laws. The review found that payday lenders were “falling short” of meeting lending obligations.
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. ASIC said the report also found “systemic weaknesses” in documentation and record keeping in the industry.
According to the ABC
, Westpac confirmed in a statement that the decision to terminate funding agreements with payday lenders was a “commercial decision”.
“[We] will no longer support new customers where we are aware that they provide ‘payday’ lending products,” the bank said.
“We are currently working with our affected customers as they source alternative banking services. We will honour existing contractual obligations as they manage this transition.”