Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697636257097.pdf (Australia)
Organisation: Kyabra Community Association Location: Brisbane 1.

Introduction to our programs, organisation and community: KyaKyabra offers a variety of services to people living in the outer southern suburbs of Brisbane.

These services include a financial resilience program (emergency relief, no interest loans, budgeting and savings plans) as well as supports for people experiencing or at risk of homelessness and support for people with disabilities.
The majority of our service users as well as many other community members experience financial vulnerability and can be easily tempted by fast loans offered by predatory lenders.

2.

Summary of the impact of payday loans, rent-to-buy, buy-now pay-later, debt management and credit repair agencies on the lives of people in my community: The advertising of payday loans and rent to buy is clearly targeted at people who least can afford these products.
Shopfronts are set up in lower socio-economic suburbs and television advertising is broadcast at times when vulnerable people are at home, sometimes alone and bored.

It is not typical to see these products being advertised in primetime.

The window displays of retailers in major shopping centres promote Afterpay, ZipPay, OpenPay etc as an option to ‘have now, pay later’.
These services are actively promoted by sales assistants who are there to make a profit for their employer and have no ability to assess the financial capacity of the customer.

These companies take no ethical responsibility for the ongoing financial wellbeing of the people they sign up to these services.

A significant number of service users have poor credit histories and limited access to mainstream credit.
On low incomes, they fall prey to fringe lenders who offer cash loans at high cost with few questions asked.

It is easy to apply for a cash loan or Afterpay online, without interacting with a human being.

Often the fees and charges associated with such loans are hidden and people do not realise the full cost of borrowing.

Payday lenders and rent to buy companies can be reluctant to provide account statements to customers.
Without detailed documentation of past transactions including fees, it is difficult for customers who are already facing financial barriers to plan, budget and understand their financial commitments.

We frequently see people stuck in a cycle or repeated payday borrowing, or multiple concurrent debts.

People with low financial literacy are easily influenced by marketing.
Financial counsellors and community agencies providing emergency relief or no interest loans have limited resources to compete with the marketing budgets of payday lenders and rent to buy companies.

Although there are many online resources to assist people to build financial literacy, people are not looking for these resources if they do not know there are better options.

3.
3.

This story of a client demonstrates the impact on real people’s lives: One service user, a single parent and carer of a person with a disability, used Afterpay for her Christmas shopping in 2017.

This resulted in her having 14 concurrent Afterpay deductions from her bank account, adding up to more than 10% of her fortnightly income.

This was on top of a Centrelink advance, a payday loan and a NILS loan.

Her bank account was regularly overdrawn.


She was very good at juggling her financial commitments but easily became overcommitted and then trapped in a cycle of borrowing and overspending.

Another service user took out a payday loan to purchase food for her family.

She applied for the loan in person and when the staff member asked what she needed the loan for she was honest.
The staff member responded that they were unable to give a loan for that purpose and asked the client to provide a different reason for the loan.

The client was then prompted by a friend to say car repairs (despite not owning a car), which satisfied the staff member’s criteria and the loan was granted.
The Credit and financial services targeted at Australians at risk of financial hardshipSubmission 50 - Attachment 2 staff member was well aware that the loan would be used for basic living expenses and did not offer any referrals for financial assistance (e.g.

financial counselling, emergency relief).


We call on the government to:  Immediately implement the Small Amount Credit Contract review recommendations, especially for rent-to-buy contracts  Regulate Buy-Now Pay-Later services  Increase funding for financial counsellors, financial capability workers and community-based safe and affordable credit options such as NILS and StepUP Credit and financial services targeted at Australians at risk of financial hardshipSubmission 50 - Attachment 2