Good Shepherd Microfinance calls for more responsible lending

author-avatar By on February 21,2019
Good Shepherd Microfinance calls for more responsible lending

A ‘legislative loophole’ is causing countless vulnerable Australians to accumulate thousands of dollars of debt on things don’t need, according to Good Shepherd Microfinance.

Good Shepherd, Australia’s largest microfinance charity, said this in anticipation of the final report on the Senate Inquiry into credit and financial services targeted at Australians at risk of financial hardship, which is due to release on Friday 22 February.

The purpose of this inquiry is to investigate the impact on individuals and communities from companies such as payday lenders and consumer lease providers.

According to Good Shepherd CEO Peter McNamara, the current lack of legislation surrounding these providers means they can exploit vulnerable people into chalking up thousands of dollars of debt for things they don’t need and “have no hope of paying off”.

Good Shepherd Microfinance CEO Peter McNamara. Picture supplied.

“It’s abhorrent – people are being encouraged to spend money they simply don’t and won’t ever have,” Mr McNamara said.

“It’s time for Parliament to catch up with financial technology and force these multi-million dollar ‘buy now, pay later’ companies to be responsible lenders.

“That means verifying the person’s income and assessing their ability to repay a loan, instead of allowing people on low incomes to buy goods they don’t need, then lumbering them with late fees.”

Previous research from Good Shepherd found 75% of ‘buy now, pay later’ customers bought something they didn’t need, while 10% borrowed money from their families to meet their repayments.

As a part of its submission, Good Shepherd cited a diability pensioner who used a ‘lease to buy’ scheme to buy four televisions and two steroes with no financial assessment of her ability to pay.

Sixty-nine submissions have been made to the inquiry to date, with the following well-known organisations all contributing:


For feedback or queries, email will.jolly@savings.com.au

Photo by Edward Cisneros on Unsplash

Latest Articles

author-avatar
David Lammey is an experienced executive within the digital and financial services landscape. Before joining Savings.com.au, he spent 5 years as a Group Executive at Canstar, one of Australia's leading financial research and comparison businesses. David is an avid financial consumer and he enjoys offering a perspective balanced from having worked in the industry and being a husband and father of two.

Collections:

Get free insights & tips monthly

By subscribing you agree to the Savings Privacy Policy

Loading data please wait...

{{returnData.productName}}

Overview

Current Rate

{{returnData.currentRate | percentage:2}}

Comparison Rate*

{{returnData.comparisonRate | percentage:2}}

Rate Type

{{returnData.rateType}}

Advertised Rate

{{returnData.advertisedInterestRate}}

Comparison Rate*

{{returnData.comparisonRate}}

Monthly Repayment

{{returnData.monthlyRepayment}}

Interest Type

{{returnData.interestType}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Bonus Interest Rate

{{returnData.bonusInterestRate | percentage:2}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Introductory Rate

{{returnData.introductoryRate | percentage:2}}

Introductory Term

{{returnData.introductoryTerm}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Term

{{returnData.term}}

Advertised Interest Rate

{{returnData.advertisedInterestRate | percentage:2}}

Interest Frequency

{{returnData.interestFrequency}}


Fees and Features

Ongoing Annualised Fee

{{returnData.annualFee}}

Upfront Fee

{{returnData.upfrontFee}}

Offset Account

Redraw

Principal & Interest

Interest Only

N/A{{returnData.interestOnly}}

Max loan to value ratio (LVR)

{{returnData.maxLVR | percentage:0}}

Lump sum repayments

N/A

Additional repayments

Maximum Loan Term

{{returnData.maximumLoanTerm}}

Upfront Fee

${{returnData.upfrontFee}}

Ongoing Monthly Fee

{{returnData.ongoingFees}}

Early Repayment Fee Applies

N/A

Vehicle Types

{{returnData.vehicleType}}

Maximum Vehicle Age

{{returnData.maximumVehicleAge}}

Pre Approval Available

N/A

Online Application

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Minimum Deposit

{{returnData.minDeposit | currency : '$' : 0}}

Upfront Fees

{{returnData.upfrontFee | currency : '$' : 0}}

Annual Fees

{{returnData.annualFee | currency : '$' : 0}}

Notice Period to Withdraw

{{returnData.noticePeriodToWithdraw}}

Online Application

N/A

Automatic Rollover

N/A

Maturity Alert

N/A