Small Loans Big Need
Apr 06 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. The availability of assistance through a highly regulated small amount credit contract (SACC) loan has been consistently decreasing since 2013.
In 2016, there were 620,000 SACC loans approved, down significantly from the 1.33 million approved in 2015. CoreData analysis also shows there was $667 million in loans for 2015, and down to $476 million in 2016. 65% of SACC Loan applications are declined.
Small amount loans are often the preferred option1 for many Australians under some type of financial exclusion or stress, with these loans having the highest level of regulated consumer protection on the market.
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%.
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.
NCPA Chairman Rob Bryant said that for many Australian households the luxury of mainstream financial choices or quickly getting access to funds in an emergency is not readily available. The small loans sector provides a vital service and assistance in difficult times for these households.
The average small loan is now $770 over 4.4 months and is limited through the caps set by the NCCP Act. 1 Financial Literacy Research, Gregory Mowle, University of Canberra MEDIA RELEASE Thursday 6th April 2017 SMALL LOANS BIG NEED 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.
The NCPA supports the federal government’s further regulation and reforms in 23 of the 24 proposed recommendations and support 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.