Small Loans - Big Need
Apr 14 2017
Friday 14th April 2017
Small Loans - Big Need
More than 3 million Australians are financially excluded from our economy according to Good Shepherd. These people often don’t qualify for a NILS loan, other assistance or simply have an emergency that requires funds they don’t have.
Recent media reports and consumer advocate groups critical of the small loan sector fail to acknowledge the important role these financial inclusion options provide for the millions of Australians not eligible for a NILS loan or other assistance.
The average small loan is now just $770 over 4.4 months and is limited through the caps set by the NCCP act with the maximum interest rate is 4% monthly.
A Small Amount Credit Contract (SACC) is a personal loan up to $2000, has been regulated under the NCCP Act since 2013 and offers the best protection to borrowers of any credit products.
There is no such thing as a payday loan (loans under 16 days) - these were banned under the NCCP Act in 2013.
The number of contacts made to lenders for new issues pertaining to SACCs from a consumer representative such as Legal Aid, Financial Counsellors Australia, CALC and the Consumer Credit Law Centre is down from 4 in 10,000 in 2015 to 2 in 10,000 in 2016.
And the Credit and Investments Ombudsman Annual 2015/16 Report notes that credit reporting complaints that attracted the largest number of complaints were from debt collectors 42%, and residential mortgage lenders and mortgage managers 14.5%, with consumer retail finance providers coming in at a much lower 7.8%.
NCPA Chairman Rob Bryant said that for many Australian households the luxury of mainstream financial choices are not readily available or quickly getting access to funds in an emergency. The small loans sector provides a vital service and assistance in difficult times for these households.
The provision of financial inclusion options for Australians who don’t want or are unable to access debt through credit cards or from other sources can still have a credit life-line in difficult times.
NCPA members provide an important service that mainstream financial lending institutions don’t provide and are already the heavily regulated by the federal government.
The NCPA supports the federal government’s further regulation and reforms in 23 of the 24 proposed recommendations and supports the current legislation for recommendation 1. The NCPA is fully committed to continue to work with ASIC to improve consumer protections.
For further information please contact NCPA Chairman Rob Bryant on 0407 292 295.