Money, Wellbeing

ASIC clamps down on pay day lenders

Published on October 12, 2017 1:04 am, by

Today ASIC announced enforceable undertakings from two pay day lenders which will see them write off some of their outstanding loans and stop offering certain products to new customers.

The Enforceable Undertakings are from Good to Go Loans Pty Ltd and Web Moneyline Pty Ltd and the loans are known as OACC2 loans.

According to ASIC, both lenders provided the loans to customers on terms that fell outside the definition of a small amount credit contract. However, on the same day customers entered into the contracts, the contracts were modified to require higher payment amounts over a shorter period of time. This may have resulted in customers being charged above the cap on fees and charges allowable under the National Credit Act.

Under the Enforceable Undertakings both companies are required to:

  • Write off all outstanding OACC2 loans including any outstanding debts which may have arisen as a result of entering into these loans
  • Notify relevant credit reporting bodies that the loans have been written off so that the customers credit records can be corrected
  • Stop providing the OACC2 products to new customers

If you have such a loan, you should receive correspondence from the company, but you can also contact the Financial Ombudsman Service (FOS) on 1800 367 287 or info@fos.org.au. you can also get free and independent advice from a financial counselor by ringing the National Debt Helpline on 1800 007 007.

We know Pay Day lenders are serving a big financial need in the community – if there was no need there would be no business. But the terms and conditions offered by these lenders are usually outrageous and there are other options.

Some options include:

  • Talking to your employer about a short term loan or payment of salary in advance
  • Talking to your bank about a payment plan if you need money to pay off a credit card or loan
  • Talking to your water, gas, electricity or phone company if you need money to pay a bill
  • Talking with Centrelink about social security options
  • Applying for more affordable loan options like NILS (www.nils.com.au) or a StepUP Loan (http://stepuploan.org.au/)

For further information you can read the ASIC announcements here:

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Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.

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