‘Payday loans…too good to be true?’


welcome everyone and welcome to today’s webinar
payday loans too good to be true today we are running this webinar from the
legal aid New South Wales Central Sydney office as well as the Tamworth legal
aid office and so we would like to acknowledge the traditional custodians
of the land the Gadigal people of the Eora nation and the Kamilaroi people
and pay our respects to elder’s past and present and also extend that respect to
any Aboriginal and Torres Strait Islander people listening today my name
is Heidi Campbell and I sometimes work in the civil law team and sometimes in
the CLE or community law legal education branch and today I am joined by Dana Beiglari
Hi Dana
Hi Heidi thanks for inviting me to speak today
Okay we’re also and as you would have heard joined by the producer of the
webinar Jessica Sullivan
Jess will be handling the poll questions today and
any questions you might have as we go along today
Thanks Heidi so let’s start with a poll question to get an idea of how much experience you
will have with payday loans so a poll question is just about to pop up on your
screen so how often do you assist clients who have taken out payday loans?
Not often all the time sometimes or never
Just give you a couple of moments to do that one okay great okay so we’ve got most people clicking
sometimes a couple with all the time and some not often but mostly sometimes so
we’ve got a good audience guys all right back to you Heidi
Okay thanks Jess so today the purpose of the webinar is to help you better understand what payday
loans are the context in which they occur and the law that regulates payday
loans
So the topics that we’re going to cover include what are payday loans?
What is responsible lending? What laws apply? Alternatives to payday loans? And where
and most importantly can I refer my clients for legal advice?
We will also discuss the recent changes to the regulation of the financial
services industry with the merging of CIO and FOZ into AFCA
So the next slide so basically Donna if our audience today had to remember just three things what
would you say they would be?
I think my three main tips to listeners that
there’s alternative to payday loans there’s laws in place that can protect
our clients and finally that it’s never too early or too late to get advice
so just to expand a little bit on those with the alternatives to payday loans
people can get caught easily in a debt spiral and there are accessible and easy
solutions to payday loans they do exist and we will talk generally about some of
them a little later in the webinar we’ll also talk about the laws that are in
place that can help and protect our clients from signing up to payday loans
that are unaffordable and we’ll also talk a bit about the remedies that are
available for our clients for example to reduce the fees and charges that they
pay where they’ve entered into an inappropriate loan and finally the third
take home is it’s never too early or too late to get advice I will talk like you
said about the referral points a couple of common ones are legal aid New South
Wales or Community Legal centres or a financial counsellor and we’ll provide a
comprehensive list of legal service providers who can assist towards the end
of the webinar and I note that will also include this lift in an email that we
send out after the webinar
Ok wonderful Thanks Dana
So lets get down to the nuts and bolts of it what is payday loan?
Payday loans are also referred to as small amount credit contracts or quick loans they’re a type
of credit that focuses on lending small amounts of money quickly and
specifically a payday loan is a loan up to an amount of $2,000 and it must be
repaid within a specific period of time so 16 days to one year yeah
Okay right and so how do clients pay it back?
So the most typical way that clients pay back payday loans is via direct debit from their bank
account but I have seen situations as well where where people arrange for
their employer to make payments directly from their paycheck
Payday loan companies generally focus on providing small amounts of cash to people quickly
like I said before and they make the process really easy and and the clients
that I work with I find are vulnerable in difficult circumstances who need small
amounts of money fast and usually they need this money for essential expenses
until their next paycheck or until their next amount of money comes in from
Centrelink and many of my clients are often in a position of financial
hardship already and I imagine that a lot of the audience would have had a
similar experience with their clients Right so we were saying to these payday
loans involve fees so can you tell us a bit more about the fees?
So the amount of fees and charges that payday loan providers can charge consumers is regulated by the
law typically payday loans contain an establishment fee and a monthly fee and
if you fail to make a repayment you’ll also be charged a penalty amount such as
default interest or a late fee so just to kind of explain a little bit about
the establishment fee and the account fee the account monthly fee how that might
work in practice if I was to take out a payday loan for $1,000 for a term of two
months the establishment there would be 20% of that amount so $200 and the
monthly fees would be 4% so $80 so I would end up paying $280 on top of the $1000 I initially borrowed
and then if I’m unable to make repayments on my $1000 payday
loan I will usually be charged to default fee until I repay the
outstanding amount in full the maximum that a payday lender can charge is twice
so $200% of the total amount of the loan and this includes any
repayments you made under the contract plus any default fees so based on that
example you can see how clients might struggle to pay off the principal amount
of the loan as well as these additional fees and can lead and people into a
cycle of debt and disadvantage which places them in further financial
hardship but because of the nature of these loans there are protections
offered under the law to consumers and I’ll discuss these in a little bit more
detail further along in the webinar Well thanks Dana you can see how these
small loans quickly add up so what I want to talk to you is about the places
where people are our clients are getting these payday loans so I know now that
it’s very accessible and to get a payday loan it’s not just a shopfront like the
old pawn shops in which clients can access payday loans they’re now
accessible from websites apps, loan ATMs known as ATM kiosks where you can easily
withdraw cash so it appears that payday loans are more accessible than ever
is that right?
Yeah I think that’s right particularly with the rise of technology
and as you say I’m being able to download an app or access a website from
your smartphone means it’s very easy to access a payday loan or make an
application for a payday loan there’s some common companies that the audience
might recognize that come up regularly in my work so Cash Converters nimble
cash for me cash and go are those loan ATMs that you mentioned before so those
are just a handful of common payday lenders but there’s also apart from
payday lenders I’ll just make a brief comment that there are other debt traps
that consumers can fall into which short-term credit providers like signo
and gold and silver finance there’s also pawnshops or consumer leases and also
buy now pay later products like after pay
and there’s also when people are in financial hardship credit reporting
companies like my budget and fox times that let’s say they can assist a person
to repair their credit and help manage their debt often for a large fee but
today we’re only talking about payday loans and so in in the context of payday
loans lenders have responsible lending obligations and are required to comply
with the laws that protect consumers and as I said before because of the nature
of payday loans there are special obligations that payday lenders must
comply with before their grant a loan Okay so if you just give us a brief
rundown what are these responsible lending
obligations?
So the responsible lending obligations essentially are laws that
protect consumers from signing up for unsuitable contracts and they protect
consumers from predatory lenders
Okay so I guess we got into the dry stuff a
little bit now it’d be great if you could actually talk to us about what are
the laws that apply to payday loans? Absolutely so there’s two main pieces of
legislation that apply and the audience you don’t need to remember exactly the
details of this all you need to remember is what the laws mean and the the
general essence of it and I think that’ll be enough to spot the issues and
make an appropriate referral so the two main pieces of of laws that we’ve look
at with payday loans are the National Consumer Credit Protection Act I’ll just
refer to that as the Credit Act and the Consumer Credit Legislation Amendment
Enhancements Act so I’ll just refer to that as the Enhancements act and so the
enhancements Act applies only to loans that were entered into after March 2013
I might just note as well that ASIC has a very useful regulatory guideline
called credit licensing responsible lending conduct that outlines some of
the obligations on lenders about lending responsibly and so it’s I think it’s a
a useful resource I look at it all the time and it might be useful for for the
audience to have a look – you can find it on ASIC’s website if you just search
regulatory guide 209 it should pop up so the two main laws that I mentioned the
credit Act and the enhancements act they apply to all credit contracts which have
been entered into mainly for household and domestic purposes and before
providing credit the lender must make reasonable inquiries about the person’s
requirements and objectives and they must take reasonable steps to verify the
consumers financial situation once they have this information the lender then
needs to assess the consumers capacity to repay the proposed loan without
substantial hardship and based on those inquiries the lender needs to make a
determination about if the credit is unsuitable for the consumer as part of
them as part of that process a common next step for me once I’ve met a client
who has a payday loan is to talk to them about requesting a copy of the
assessment that the lender made about whether the credit is not suitable for
the client and you would be able to request this on behalf of your client if
you wanted to from the lender and you could address your correspondence to the
complaints contact on the AFCA on the Australian financial complaints
authority website
Ok wonderful thanks Dana and why would someone want to
request a copy of their assessment?
So you might want to request a copy of the
assessment about compliance with the responsible lending conduct to basically
assess if the lender has done what they’re supposed to do according to the
law and when you have a look at that assessment you can see how the credit
provider has worked out if the loan is in fact suitable for the consumer and
you can see your clients capacity to repay as well so it can often form the
basis of a complaint if the lender hasn’t done the right thing in
accordance with the law
Ok great I think that summarises
is the credit act really nicely so could you talk to us now about the enhancement
enhancement act and when that applies to payday loans?
Sure so the enhancements act is that second piece of law that I was talking about that applies to payday
loans the law the enhancements Act applies to small amount credit contracts
which are payday loans and as I said before a payday loan is an amount that’s
less than two thousand dollars and where the term is one year but less than
sixteen days so between one year and 16 days and the enhancements act as I said
before applies to loans entered into for a March 2013 there are new Responsible
Lending presumptions and obligations for payday contracts within the enhancements
act and the intention there is to address the risk of debtors spiraling
and spiraling into a debt spiral
Okay so what are the actual obligations of
lenders under the enhancements act?
So the the additional responsible lending
requirements there’s a number of them so I’ll just go through them now the first
one is that the lender must obtain and review the bank statements of a consumer
for the previous 90 days when verifying their financial situation in relation to
the payday loan application so that’s that’s the first step that needs to
happen secondly the lender must assess a application as unsuitable where the
borrower is already in default under another payday loan or in the
three-month period before the lender makes their assessment the consumer has
had two or more payday loans so in those circumstances the borrower will be
deemed to only be able to pay the loan with substantial hardship and that’s
unless the lender can prove the contrary so that protection is essentially trying
to prevent people from getting into that debt spiral and entering into unsuitable
contracts where there are some red flags like already being behind
in a payday loan contract or having a number of payday loan contracts in a
three-month period another protection is that a lender payday lender must not
enter into a contract with a consumer if the consumer receives at least 50% of
their gross income as payments from Centrelink and the repayments in a
payment cycle would exceed 20% of the consumers gross income
Right okay so I guess that would be a matter of sitting down and making those calculations and
obviously the people watching today can make those referrals so the next
thing I want to talk to you about is it looks a bit complicated whether they’ve
met these responsible lending obligations so what when our clients go
to get a payday loan what do they actually do? hmm good question so yeah
what what can your client expect when they’re getting a payday loan or what
kind of experience has your client had when they’ve applied for a payday loan
so like I said um they have to provide documentation to the lender so that the
lender can conduct reasonable inquiries and verifications about the financial
position of the consumer and so in the context of payday loans there’s those
bank account statements so the lender has to ask for the previous 90 days of
statements for the bank account where the consumers income is paid into and
that includes Centrelink payments and if the consumers income is paid into more
than one bank account they must provide 90 days of statements for each account
they don’t have to be paper statements they can just be printouts from internet
banking but the the lender might ask you for additional details to confirm that
your the account holder there’s also other information that the lender might
ask for to work out if the consumer is able to meet the repayments of a payday
loan for example they might ask for pay slips or Centrelink statements copies of
recent bills copies of other credit contracts or statements of accounts or
until statement showing if you’re up-to-date with your rent and basically
those documents are useful for the lender to check the consumers financial
situation before they give you a loan and the number and type of documents
that a lender asks for may depend on whether they’ve dealt with the customer
before may depend on the person’s credit history what information is contained in
the bank statements and so as I said before it’s pretty unlikely to get a
payday loan if your bank statements show that you’ve had two or more small two or
more payday loans in the last 90 days or if you’re spending all of your money
each pay and you’re unable to meet your expenses or you’ve missed a payment on
another payday loan or another loan for example a credit card or a personal loan
so those are some red flags or they should be red flags for lenders when
they’re reviewing the consumers 90 day 90 days worth of bank statements
So yeah
So would you give us a smart tip then about you know if a client is looking at
a payday loan do you have any quick tips? Yeah so what I would say I mean I would
still talk to my client about different alternatives and I’d probably make a
referral for my client to see a financial counsellor but I would
encourage my client to shop around to make sure that they’re getting the best
deal possible there’s aggregating services to compare
fees on different different credit providers so I’d encourage the client to
do that but I think is our first step I would encourage the client to consider
alternatives and maybe seek some extra support from a financial counsellor
Great thanks Dana that’s great so we might have another poll now and Jess
we’ll lead the poll question as a review of the information that we’ve
just discussed so far
Okay so we’ve got the second poll question
is Shirleyis applying for a payday loan from small bank she is in debt with
little bank for another small amount credit contract and the question is why
should small bank not provide the loan – to Shirley
so the options here are a she’s already in default under another small
amount payday loan B she has had two or more small amount payday loans in the
three-month period C she is receiving more than fifty percent of her income as
a payment from Centrelink or D the loan does not meet her requirements so the
question again just to confirm was Shirley is applying for payday loan from
small bank she’s in debt with little bank for another small amount credit
contract why should they not provide the loan to Shirley?
Okay so I’ll close the poll now and share the results so we’ve got 38 percent of people have selected A Dana, what is the right answer? The right answer is A
So Shirley as the the question said is already in default under another payday loan and so
where that happens then that’s a reason for small Bank to not provide the loan –
surely according to the enhancements act the other answers are a little bit of a
red herring but if it was the case that Shirley didn’t have two or more small
amount loans or she received more than 50% of her income as payments and 20% of the repayment would be towards the payday loan then those answers would be
correct but they weren’t mentioned in the question themselves I just like to
note on a slightly different topic that there are other obligations on payday
loan providers for example disclosure obligations and hardship obligations
where people are finding it difficult to make repayments but this presentation is
sort of narrowing its focus about the responsible lending obligations so I
won’t go into too much detail there Okay great thanks for that Dana now I
know we touched on this briefly in your smart tips but I think we need to go
into some detail for the people listening today for their clients so are
there any alternatives to payday loans and what options are there for our
clients?
Yeah so um the the first option is that the the client could instead
apply for a no interest or a low interest loan Good Shepherd’s
Nils program has been very successful and there’s a number of other loans that
they can provide as well they do have a payday loan alternative which I think is
called Speckle so just to think a little bit about the no interest or
low-interest loan where the clients on a low income those kinds of loans can be
used to pay for essential household goods or personal services such as
medical treatments and these loans can be more appropriate than payday loans
because of the low to no interest rate which starts the client from being
trapped in a cycle of debt to pay down the additional fees which you typically
attach to payday loans the second option could be to kind of
cut out the credit middleman and just negotiate directly with your utility
provider or your landlord whatever it is that you need the money for go directly
to that source and talk about your circumstances of hardship so for example
if the client is suddenly requires money to pay for an unexpected power bill so
it’s at the end of summer or winter or if they’ve fallen behind in their credit
card payments after Christmas and the best advice can be to contact the energy
provider or the credit card provider and try to enter into a hardship repayment
plan rather than getting into more debt to pay your debts and so most companies
these days have hardship officers who can help the client work out a plan to
pay the bill in installments or apply for an emergency utility bill voucher
yes so I think Jess some of these links that that I’m some of the information
that I’m referring to is going to be sent around to the participants
afterwards so if you’re interested in anything that I’ve been discussing know
that we’re going to share some information the third alternative is the
Centrelink advance payment so where your client receives Centrelink benefits they
may be able to apply for an advance payment with no interest charges and
clients can access information about how to do this through the Department of
Human Services website so basically the take-home is that if your clients need
money because they’re experiencing financial hardship there could be
cheaper alternatives to a payday loan so it’s it’s important to kind of raise
those with your client and I just noticed well that if your client is in
crisis and needs emergency relief or emotional support there’s an urgent
money help page on legal aids website and we’ll send round the link to that
shortly afterwards
Great thanks Dana you’ve given us some really useful
alternatives that we can recommend to our clients so what we’re going to do
now everyone isn’t going to have a bit of case study and for the purposes of
this webinar we have de-identified the client so this is Caitlin yeah and
Caitlin is a single mother who has racked up a lot of credit card debt and
has been taking out payday loans to pay her credit cards and her electricity
account debt she’s had eight payday loans in the last six months and she’s
in the receipt of a Centrelink payment and she works part-time
So Jess is going to do a poll question in relation to that scenario now okay
So I’ll just leave the information up for a second while I read the question
at first so the question will be what could Caitlin have done instead of
taking out this loan? So our options here are she could have negotiated with her
electricity company she could have applied for a hardship application with
her bank she could have used Center pays with Centrelink or all of the above so
I’ll give you a couple of my to select an answer there okay and I’ll
close the poll and share the results so we’ve had a hundred percent of people
have selected D all of the above Dana
Excellent so that’s what I would have said as well and the alternatives that Caitlin could have used instead of
going directly to the sources of debt and talking about her financial hardship
and working out a moratorium on payments or a reduction in payments until she
gets back on her feet Caitlin might also consider going to see
a financial counsellor to assist with her her financial hardship and she might
benefit from speaking to a lawyer I’m just thinking about those eight payday
loans that she’s taken out in the last six months that could be a breach of one
of the prohibitions in the enhancements act about signing up to two or more
payday loans in a three-month period preceding the new payday loan
application so potentially she might have an
argument there that the payday loan provider has done the wrong thing and
she might be able to be refunded the fees and charges that she’s paid above
the principal amount of the loan
Okay thanks Daba and Jess so we’ve got one
more example here well we have de-identified a client it’s a common scenario that I’m
sure we’ve all seen before so this is Lea and Lea’s car broke down on the way
to work
Lea took her car to a local mechanic and he said he could fix the car by tomorrow
but it would cost Lea $1500 Lea works part-time as an aged-care worker where she receives $200 gross per week Lea also receives Centrelink benefits of $400 gross
per week Lea needs her car to visit her patients
Lea knew she wasn’t going to be paid for another week and didn’t have any
money in savings so Lea visited her local cash for me now shop to get a
quick loan for the car repairs Lea knew she could go a loan quickly from cash for me
now and she already had two loans with them in the last two months due to her
washing machine breaking down and large electricity bill
She gave the cash for me sales rep one month’s worth of bad statements
she was then approved for a loan of $1,500 which she was then required to
pay back for a period of 12 weeks at $165 per week Lea was granted the
funds so the direct debit from her bank account and so set up a direct debit from her bank account to repay the loan
Lea is now ten weeks through her payment plan and so
she’s really struggling to get by she’s unsure whether she’ll be able to pay her
rent this month so in relation to that scenario Jess is going to put on a poll
question
Okay so the question for this one is how many times has cash for me
now broken the law?
So we’ll launch the poll so the answer options are one two or three
times how many times do you think cash for me now broke the law?
And I’ll just give you a couple of moments okay great and I’ll share those results so we’ve
got a pretty even spread here we’ve got 40% with twp 50% with 3 and 6% with 1
Daba talk to us
So the answer is 3 times so let’s just go through and
identify the 3 breaches of the law by cash for me now so the first you is issue is that they have only gotten one month’s worth of bank statements they haven’t taken 90
days worth of bank statements from Lea so that’s the first breach of the law
The second is that they haven’t assessed the loan as unsuitable for Lea because
she’s already been granted two payday loans in the last three months so that
should have been the other red flag for cash for me now when they were looking
through her bank statements and having a chat to Lea they should have realized
that she had to payday loans in the last three months and as a result it’s not
suitable for her to sign up for an another loan
And the third breach of the law is that cash for me now shouldn’t have entered into
the credit contract with Lea as more than 50% of her income is from
Centrelink payments and the repayment amounts were more than 20% of her gross
income so the repayment amounts for the payday loans so that one that was a bit
tricky to work out that final one because you had to do some quick math in
your head but that’s the three breaches of the law that came up
So Lea should really get some further legal advice about her matter and and
she might be able to lodge a complaint and internal dispute resolution
complaint with cash for me now on the basis that the loan was unsuitable and
that they’ve breached various requirements of the enhancements act so
if you speak to a client who has similar set of facts to Lea or to Caitlin then
then you’ll be able to refer your client Okay thanks Dana and Jessica for taking us through that so Dana you were just saying if you believe that your client
the lender hasn’t complied with the enhancement act what can they do so can
you talk to us about what workers should suggest to their client and what they
think their client should do if they do believe that a credit provider has failed to
meet their obligations?
Mmm absolutely so where you think your client where you
think the payday lender hasn’t done the right thing by your client where they’ve
breached the responsible lending obligations in the credit law and some
of those protections we’ve been discussing in the enhancements act you
might want to refer your client to a lawyer to get some legal advice
So what what your lawyer would do or indeed what the client could do themselves or what
you might be able to assist them to do is to make a complaint it’s called an
internal dispute resolution complaint an IDR complaint to the payday loan
provider and basically you would set out the issues there so the particular areas
of the law that have been breached and how the loan has been unaffordable for
for the consumer if that doesn’t resolve the matter then
you can make a complaint to an external dispute resolution scheme so there
financial services disappear resolution scheme is the Australian Financial
complaints Authority AFCA and external dispute resolution so AFCA is free to
the consumer and they don’t lose any of their rights to go to court if they’re
dissatisfied with the result that they get through AFCA
Consumers don’t need a legal representative to go to AFCA but financial counselors all lawyers can
advocate on behalf of the consumer and AFCA is essentially a one-stop-shop
for financial financial complaints and disputes about financial services it
used to be two schemes it used to be the Financial Ombudsman Service and the
credit and Investments Ombudsman but they’ve merged they merged in November
last year and AFCA now covers all providers of financial services and they
hear a variety of complaints about credit and Finance and loans about
insurance investments and financial advice and about superannuation but
before a client complains to AFCA it’s important that they complain directly to
their financial firm or the payday lender first using their IDR process and
if you want to find the financial firm and their contact details you can go to
the AFCA website and use their find a member tool to find the complaint
contact information for the payday lender
It’s important to think about what outcome the client wants so what kind of outcome they want to achieve
where there’s been a breach of the law and with the kind of laws that I’ve been
discussing today it’s typical for the client to have to account for the
benefit that they’ve received so if they have received $100 loan and use that and
spent the money and in their own life then they will have to pay back the
amount that they’ve spent but they may not have to pay back the extra fees and
charges and interest on top of that $100 and the
rationale behind that is that the lender shouldn’t have to sorry the lender
shouldn’t be able to benefit from breaching the law that is taking extra
money from the consumer when they’ve not done the right thing by the consumer but
on the other hand the consumer can’t be unjustly enriched and can’t take the
$100 benefit I’m leaving leaving the payday lender you know out
of pocket so that’s kind of the rationale and that’s a common outcome
that I assist my clients with which is reducing the amount that they owe back
down to the principal with no interest and fees and charges on top of it
and so when making a complaint it’s it’s important to collect any relevant
documents that might support your complaints so before you make a
complaint about a payday lender typically I write to the payday lender
and ask for a number of documents I talked about the assessment earlier on
but I might also ask for the documents that they relied on for example the bank
statements or pay slips or Centrelink statements and I use that to kind of
paint a picture of what their process was at the time I might also talk to my
client about their financial difficulty and currently and I might refer them to
a financial counsellor to fill out a statement of financial position so the
final option when you’re making a complaint about a payday loan is an
option of last resort and that’s to go to court often going to court it doesn’t
make sense on a cost-benefit analysis because the amounts in question can be
quite small and the cost of going to court can be quite large so it’s a
really good idea to get legal advice first and to consider making a complaint
after in the first instance before going to court and you can also make a
complaint ASIC about the payday lenders conduct through their online complaint
form on their website ASIC don’t work out individual outcomes for
consumers but rather it’s kind of like a way that they can gather Intel and then
do investigate about the conduct of the industry and
then perhaps take steps to reach a solution for a group of consumers who’ve
been affected by that particular conduct That’s great Dana well that’s really a
good run through all the remedies that are available to our clients if we feel
like they may have been adversely affected by a payday loan
So what I want to talk about now is you’ve talked about what remedies are available so where do we
send our clients to get help? Where do they go to first if they have if we feel like they
have had an issue with payday loan?
Yes so speaking to a legal aid lawyer is a
great place to start but there are other legal services that have a similar
expertise to legal aid lawyers for example Community Legal centres in the
clients area but also consumer credit specific legal centers around Australia
there is a credit and debt hotline the number is 1800 007 007 which puts you in touch with the Consumer Credit Legal Centre and also financial counsellors which can be a really good starting point to refer clients to as I’ve said through the presentation financial counsellors can be a really excellent resource in assisting clients who are experiencing financial hardship and of course you can refer your client to AFCA as well as part of my advice to clients I remind my clients that there are time limits to apply to get an outcome if they think the payday lender has done something wrong so typically it is 6 years from the date that they entered into the pay day loan contract or if they have already complained to the lender through internal dispute resolution if they have already made one of those complaints I discussed a few minutes ago then they only have two years to make a complaint to AFCA Ok so we will include in an email to everybody at the end of the
webinar link to the places that you just spoke about Dana where we can refer
clients for help so thank you very much for that and I would like to just thank
you Dana for all your knowledge today you’ve really summarized it quite well
and simplify what can be often a complex and confusing area of consumer law but
one that you know a lot of our clients are affected by so it’s really good to
have the basics on it so we will now stay online for a couple of minutes to
answer any questions and Jess thank you for everything you’ve done for
organization today and Jess will read out any questions that come through on
the poll
Great thank you guys so if anyone has any questions now is the time
to type those into your question panel we’ll just mute ourselves for a moment
oh no we’ve already got one so I’ve got a question ‘what protections are there
for clients with limited skills?’
Okay so I’m just thinking limited skills I’m
wondering if that means reduced capacity to enter into contracts so if I’m okay
cool I think I’m understanding the question correctly so in in that
particular case I might then just make an argument that the client didn’t have
the capacity to enter into a contract at the first instance I just make it very
simple and maybe support that argument with a letter from the clients health
care professional about their capacity and about their particular limitations
and based on that I would ask that the contract is completely voided so that
the client doesn’t have any ongoing obligations to make repayments
Great so we’ve got another question now following ASIC’s action on signol what will happen
to the existing debts is there any indication? That is an excellent question
So the the use of the product intervention powers by ASIC that’s been
in the media a bit recently that is going forward so any existing signo
contracts prior to when when the product intervention
powers were exercised last month will stand and that means that it’s important
to continue advocating on your client’s behalf about their financial hardship
and about if if you think that signo has done some wrong things in signing up the
client for that particular financial product you could also refer to a
ASIC’s exercise of the product intervention powers and include a link ASIC’s media release as a way of bolstering your complaint letter
Okay great thank you and what age can a young person apply for a payday loan?
so you are able to enter into a contract once you’re of legal age so once you’re
18 but there are certain there are certain provisos where you’re a young
person who is emancipated or has independence but I would say a simple
answer to that question is that you need to be 18 and over and if you’re not and
you have some concerns about the process of signing up I would go and chat to a
lawyer about it
Okay great and just to follow up from the previous question
about capacity does it make any difference if the application for the
loan has been made over the Internet? um I don’t think so I think it’s still open
to make the argument that the client didn’t have capacity and to make the
argument that a lenders processes should be able to make a an adequate assessment
of a person’s ability to service a loan and to enter into that loan contract so
I would I would just make the argument I would address the point that it was made
online and also review the documents that were submitted online and any notes
that accompany the file just to see if there were any red flags that the the
lender should have um tweaked to and you can also of course think about making
some responsible lending style arguments so if the person immediately defaulted
on the repayments or already was financial hardship when they were
signing up all of that can kind of bolster your argument that they
shouldn’t have been entered into the contract in the first place
Wonderful answer okay so that’s all the questions we have received you all seem to be very
well informed from this webinar which is good so we might leave it there if there
are other questions the [email protected] [email protected] email address is on the screen now and you
can send us any extra questions to that email inbox and we’ll have a look at
those later but thank you so much for attending and
for participating in today
You guys really make these live webinars so much
more interesting and we learn so much about what we can teach you guys in the
future please make sure that you tell people that you know about our webinars
and about our community workers program and that’s all from all of us today
goodbye everybody

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