A debt manager is urging the government to tighten regulations for payday loan creditors, in the face of growing consumer debt.
Debt Rescue claims payday loans are part of a “vicious cycle” that only encourages further debt.
“It is a desperate situation for a growing number of people who feel they have nowhere else to turn,’’ said Rachael Witton, Debt Rescue’s operations manager.
Witton said “sweeping industry and educational changes” were needed to combat the debt cycle.
“We need an urgent reform of the financial hardship provisions used by creditors so there is a more uniformly-accepted practice based on what individuals can genuinely afford to be adopted by all creditors,” she said.
“Unfortunately there is place for pay-day loans and short term lending which will continue until the government shifts its thinking on the issue.’’
Her comments come after ASIC cracked down on two personal loan lenders for misleading consumers on rates and obligations.