Queensland Council of Social Service chief executive Aimee McVeigh said community organizations deliver the program to fund so people don’t find themselves in a “debt spiral” at an already difficult time.
“Frontline organizations across Queensland have been contacting us since March with stories of their clients being contacted aggressively by payday lenders and consumer lenders,” she said.
“Without adequate funding organizations cannot afford to devote more than a few hours per week to providing NILS services and many organizations have reported having had to turn away clients.”
More than 6,000 NILS loans were made statewide in 2019. While a report by the Consumer Action Law Center found that residents of Queensland had entered into 300,000 payday loan agreements during the same period, with around 15% of these people falling seriously into debt.
Ms McVeigh said her organization feared that number could “increase dramatically” due to COVID-19, exposing people to charges equivalent to an interest rate of over 800%.
With an injection of $ 3 million each year from the state government – based on the NSW model – long-awaited federal regulations for small credit lenders was another solution, she said.
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State Communities Minister Coralee O’Rourke said the government was working with community service groups and industry leaders to “address emerging challenges and consider service responses.”
A total of 3,400 loans have been made by the state’s two Good Money stores since their launch in 2017, she said.
Deputy Federal Treasurer Michael Sukkar said small credit reforms were still on the table if “needed” after laws were passed last year allowing the corporate watchdog to step in if it considered consumers of a product were at risk.
Financial advisers have warned that the twin crises of the bushfires and COVID-19 this year could lead more vulnerable people to take out predatory payday loans to access quick cash.
In May, the head of the Australian Securities and Investments Commission said during a federal COVID-19 special committee hearing that the rates offered by these lenders would be in the crosshairs of the watchdog as federal payments of pandemic support were coming back.
