South Australian Payday Lending Reform

In September 2020 the South Australian Government commenced consultation on the draft Fair Trading (Small Amount Credit Contracts and Consumer Leases) Amendment Bill 2020. The Bill introduced a number of critical protections for consumers to prevent predatory consumer lease providers and payday lenders from drawing South Australians into unmanageable debts.

The Salvation Army’s experience walking alongside people experiencing disadvantage is that the current protections are not sufficient safeguards for vulnerable people who are aggressively pursued to take out these unmanageable loans and leases.

The Bill introduced a number of critical protections, including:

• banning unsolicited sales of payday loans,
• preventing door-to-door sales of consumer leases,
• prohibiting early termination fees,
• requiring equal repayments and repayment intervals for loans,
• forcing lease repayment caps, and
• preventing loans that would cost more than 10 per cent of a consumer’s net income.

These all represent a significant advance in consumer protection when it comes to payday loans and consumer leases.

In our submission, The Salvation Army strongly encouraged the government to proceed with the draft Bill and enact the protections promptly.

The draft Bill has not yet been introduced to the South Australian Parliament, however The Salvation Army is continuing advocacy to protect vulnerable consumers from unmanageable debt at the Commonwealth level.