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No one has the right to rip anyone off – Statement from FCA Representative Council

Financial Counselling Australia’s Representative Council – made up of the leaders of the financial counselling sector in Australia – is calling on governments around Australia to get tougher on businesses that rip people off.

Businesses like payday lenders, rent-to-buy companies and for-profit debt management companies can cause enormous harm, with financial counsellors left to pick up the pieces.

Meeting in Melbourne last week, the Representative Council noted the growing problems from these business models and the need for urgent legislative action.

Payday lenders and rent-to-buy companies
We have been waiting nearly 12 months for the Federal Government to introduce laws that will strengthen protections for people using payday loans and rent-to-buy contracts.

The longer we wait, the more people are adversely affected. Once a person is trapped with high cost credit it is really difficult to escape.

The single most important planned reform is capping the level of repayments on payday loans and rent-to-buy contracts at 10% of a person’s net income.

For-profit debt management companies
We need urgent action to strengthen the regulatory framework applying to for-profit debt management companies – credit repair agencies, debt negotiators, budgeting services, bankruptcy advisors and debt agreement administrators.

More and more financial counselling clients are coming to see us after being caught up with these type of businesses, believing the “promise” that this will resolve their financial difficulty.

Clients are often not told the true story about the implications of debt agreements – that they are an act of bankruptcy – or understand their full costs. Instead, they find themselves in a debt spiral and financial hardship that can last many years.

Graham Smith, Chair of the Financial Counsellors Association of NSW provided a current example:

“The for-profit industry can be wolves in sheep’s clothing targeting those who are vulnerable or financially disadvantaged in our community. I am currently working with a refugee, with limited English skills, who was convinced by one of these organisation that they were her only option because they represented the Government. My client was unaware that her debt agreement was an act of bankruptcy and that her credit file would be affected, resulting in greater financial hardship.”


The FCA Representative Council is made up of the chairs of each State and Territory financial counselling association in Australia and one other accredited financial counsellor from each association. The three non-voting members are the Chair of the FCA Board, FCA’s CEO and one other member of the FCA Board.

Payday loans are loans of up to $2,000 for a period of 16 days to 12 months. These loans typically attract comparison interest rates of between 407.6% and 112.1%.

Under a consumer lease (rent to buy), consumers make rental payments to the lessor, usually on a fortnightly basis over a fixed term (typically between 12 and 48 months). The consumer has no contractual right or obligation to purchase the goods at the end of the lease term. There is absolutely no cap on the amount consumer lease providers can charge. In ASIC’s report on the cost of consumer leases for household goods, it found in one case a dryer cost a Centrelink recipient the equivalent to an interest rate of 884%.*


State Financial Counselling Association Contacts

ACT – Rachael Milfull – Chair – 0407 583 930
NSW – Graham Smith – Chair – 0437 368 967
QLD – Jan Perkins – Chair – 0467 335 557
SA – Anne Crouch – 0428 326 523
TAS – Fiona Moore – Chair – 0403 224 715
VIC – Julie Barrow – Chair – 0432 234 988
WA – Bev Jowle – Executive Officer – 0499 014 382

Financial Counselling Australia

Fiona Guthrie, CEO Financial Counselling Australia, 0402 426 835
[email protected]

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