Western Australian consumers are to get greater protection from unscrupulous so-called ‘pay day lenders’.
Consumer Protection Minister Sheila McHale today moved to close a loophole that has allowed some short-term loan providers to exploit vulnerable consumers.
“This legal loophole has allowed a number of unscrupulous lenders to prey on often desperate people,” Ms McHale said.
“These changes are not about shutting down pay day lending, but ensuring people are afforded proper protection under consumer credit law.”
The Minister said until now some lenders had structured loans in the form of ‘bill facilities’, most commonly used in business-to-business transactions. This had allowed the lenders to bypass the consumer credit code.
“This code ensures people receive adequate information about loans, protects them from unfair debt collection practices and offers redress when problems arise,” she said.
Ms McHale said she was shocked to learn of a recent case of a man on a disability pension who had defaulted on a loan of $150, only to have it escalate to $1,500 in just four months.
“Fortunately, Consumer Protection was able to negotiate that amount down in court, but many other vulnerable people have not been so lucky,” she said.
The Minister said she expected the credit code changes to be introduced within weeks.
Minister's office - 9213 6900