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Community coalition calls for urgent action on BNPL and wage advance products as the cost-of-living soars

More than 100 organisations have signed an open letter calling on the next Parliament to urgently make buy now pay later (BNPL) and wage advance products safer.

Initiated by Financial Counselling Australia, Anglicare Australia, CHOICE, Financial Rights Legal Centre and the Consumer Action Law Centre, the letter has been endorsed by a wide range of community groups, including the Australian Council of Social Service (ACOSS), St Vincent de Paul, Youth Action, The Salvation Army, UnitingCare Australia, Wesley Mission, Tenants’ Union of NSW and Good Shepherd Australia.

The BNPL and wage advance industry is growing rapidly as the cost-of-living surges, with more people using these products to pay for essentials.

BNPL and wage advance products are unregulated credit products, using a loophole in our credit laws to bypass basic consumer protections – like assessing someone’s ability to repay or having hardship processes.

These loopholes are allowing BNPL providers to offer loans up to $30,000 without doing basic checks on whether people can afford it. Research from ASIC shows that one in five people with BNPL debts have cut back on essentials to make their repayments.

The open letter calls on the next Parliament to close these gaps and protect people from debts they can’t afford.

Both products are causing harm, particularly for young people and those on lower incomes. We are seeing more people becoming overcommitted, sometimes with multiple accounts. ASIC’s research shows 20% of BNPL users cut back or went without essentials to make repayments.

For example, one young person who recently called a financial counsellor has multiple BNPL debts totalling $8000. Their only income is the Youth Allowance of $522 a fortnight.

Quotes from Fiona Guthrie, CEO of Financial Counselling Australia.

“Together our organisations support hundreds of thousands of people in financial hardship. We see first-hand the harm of unregulated BNPL and wage advance in our community. Our next Parliament must act to properly regulate these products to make them safer.”

“We know these products cause harm. BNPL is credit and should be regulated like other credit products.”

Quotes from Kasy Chambers, Executive Director of Anglicare Australia.

“As more people struggle with the cost of living, too many are turning to these products to get by.”

“Anglicare Australia and our members are seeing first-hand the harm this is doing to people who are being preyed on and getting trapped in debt.”

“Our rules haven’t kept up, and unregulated lenders are taking advantage of the gap. We’re calling on whoever wins this election to bring in new protections that stop people from being stuck with debts they can’t afford.”

People in financial stress and who may be struggling with BNPL and wage advance debts can contact a free and independent financial counsellor on 1800 007 007 or visit ndh.org.au.

A copy of the letter can be found here.

ENDS

To arrange an interview with Fiona Guthrie please contact Maura Angle on 0418 334 121 [email protected].

To arrange an interview with Kasy Chambers contact Maiy Azize on 0434 200 794 or email [email protected]

Gambling survey shows growing harm and need for more training for financial counsellors

A new survey of financial counsellors has highlighted the growing harm caused by gambling and the urgent need for additional workforce training.

Financial Counselling Australia (FCA), on behalf of the state and territory financial counselling associations, is calling on the Federal Government and the Opposition to commit to provide funding to upskill the sector.

The inaugural national survey canvassed the views of financial counsellors across Australia. The responses illustrated the rapidly growing incidence of gambling related harm.

“We are asking for $5m to develop gambling training for the sector, including the next generation of financial counselling students,” said Lauren Levin, FCA’s Director of Policy and Campaigns.

Financial counsellors are reporting that the rapid growth of gambling has resulted in increasing numbers of people affected by gambling harm, experiencing multifaceted problems. Helping these clients is more complex than working with clients not affected by gambling. It involves responding to addictive behaviour, potential suicidality, high debt levels and many other co-occurring problems.

Financial counsellors are most concerned about online gambling which has exploded because of uncontrolled, wall to wall, sports betting advertising. Other gambling activities causing increasing harm in the community include cryptocurrency and forex trading, and social casino games.

The survey received 395 responses from financial counsellors, a 44% response rate.

  • 46% said their agencies don’t receive specific funding for gambling work or funding to employ a gambling financial counsellor, but they nevertheless try to help their clients impacted by gambling.
  • 13% of respondents said they are unable to assist clients impacted by gambling.

“We don’t want a single person to be turned away when they are brave enough to reach out for help,” said Ms. Levin.

“The financial counselling sector needs a significant investment in training so practitioners, both generalists and gambling specialists, can better work with and support clients affected by gambling.

“Financial counsellors also need training to stay across all the new and evolving forms of gambling, to minimize harm. Better training will enhance financial counsellors’ capacity to help some people get funds back when gambling companies have breached their obligations,” said Ms. Levin.

Gambling support work is emotionally challenging for financial counsellors. The best way to look after the mental health of our workforce is to ensure financial counsellors are appropriately upskilled and have manageable workloads.

We will approach the Government, regardless of who wins power, with policy reforms designed to reduce the gambling harm identified in this survey.

A snapshot of the report can be found here. The entire survey will be released once all the results have been analysed.

For comment, please contact Lauren Levin 0411 050 035 or email [email protected]

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