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Legislation for payday loans sitting idle as Hunter families grapple with the impacts of high-interest debt

ACT NOW: Brad Webb, Louise Pratt, Sharon Claydon and Graham Smith talk about payday loans on Monday at Civic Park, where they made a collective call for legislation. Federal Labor has called on the Turnbull Government to be“proactive”regarding payday loans and act onlegislation to better protectvulnerable consumersfrom the effectsof high-interest debt.
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Newcastle MP Sharon Claydon was joined by Shadow Assistant Minister for Families and Communities, Louise Pratt, and key industry figures atCivic Park on Monday to push the party’s call to fast-track legislation.

“We’rehere today to shine a very big light on the practice of payday lending,which is really ascourgefor many vulnerable families in our region,” MsClaydon said.

“When we have a royal commission shining a biglight on very horrific practices that have been undertakeninfinancial services, it isunconscionable that the government wouldnot implement its own legislation that has been sitting for more than a year, on its tables.”

The Turnbull Government committed to reforms in November, 2016following a review into small loans and put out a draft consultation bill in October last year, but industry lobbying has led to a standstill. Labor has now introduceda “word-for-word” copy of the bill, said Ms Pratt.

READ MORE:Fitzgibbon seeks D-day as payday loans overwhelm the desperate

Payday loans are those up to $2,000 whichmust be repaid between 16 days and oneyear. Theycan be obtained with minimalassessment and are usually applied for over the internet.

Lenders canmake repayment deductions from a loanee’s weekly pay at20 per cent of their weekly income and can charge a 200 per centdefault fee.

Areport from the National Credit Providers Association, thepeak body for small loan providers, states there were619,549 loansapproved in in the 2015-16 financial year.

“This isa broken business model that relies completelyon the the exploitation of vulnerable people and families,” Ms Claydon said.

Ms Pratt said there has been a“failure to act” from the Turnbull Government on the“terrible loans practices”.

She was“shocked” to realise there areATM-style machines in the Hunter offering payday loans.One company’s machinesare located atCessnock, Raymond Terrace and Mount Hutton.

“They’re targeting low-income, welfare dependent areas,”Graham Smith, chair of Financial Counsellors Association of NSWsaid.

“It’s about trapping people, getting people caught up in a system that they find it very difficult to get out of.”

The proposedlegislation seeks to reduce the weekly pay deduction rate capfrom 20 to 10 per cent, among other changes.

Brad Webb, of Samaritans Newcastle, said payday loans can oftenleave people in a“spiral of debt” and calling on his organisation seeking food, help to pay billsand to“keep the wolves at the door.”

“When you find yourself in an environment where you’re paying backexorbitant interest rates on debts that those repayments take an increasing proportion of your available income, that means you’re not putting food on the table… you’re going without the family treats and things that make family life valuable, important and rich,” he said.

“Our call is upon the parliament to legislate, to put in place protectionsthat will ensure these people don’t find themselves trapped in a cycle of debt from which it’s difficult to recover.”

Ms Claydon said the meeting on Monday was designed to send a message to the Federal Government.

“It’s a wake-up call to a government who should be learning from the royal commissionthat they need to be proactive in their attempts to regulate financial services,” she said.

“There are legitimate places for people to access small loans, but it needs to be done with the correct support services and financial counselling support services in place.

“It’s this unfettered, unregulated industry that preys on vulnerable families and communities, like ours, that should not be allowed to continue.”

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