Stop the debt trap

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No-one should be forced to choose between putting food on the table or paying off their loans, yet that is the reality for thousands of Australians caught in the debt trap due to high-cost fast loans and harmful consumer leases.

It has been more than 1000 days since the federal government accepted the recommendations of its own review into small amount credit contracts, yet no action has been taken to protect Australian families and individuals.

High cost fast loans (also known as payday loans) are a multi-million-dollar industry that has a history of non-compliance with responsible lending guidelines. They profit by entrenching Australians in a cycle of debt, limiting their ability to participate actively in the economy and use their money to pay rent, feed their kids or keep the lights on.

Despite responsible lending obligations, there is evidence that lenders continue to offer loans to people who can’t afford to pay them. The independent Review of Small Amount Credit Contracts (SACC Review) found that the current laws are not effective at ensuring lenders don’t overburden borrowers.


The recommendations put forward by the SACC Review would be a critical first step to improving protections for people who use payday loans and consumer leases by capping the amount of a person’s income lenders can take.

QCOSS has joined the Stop the Debt Trap alliance calling on the government to implement stronger laws to protect Australians from irresponsible lenders. The alliance is asking government to commit to the findings of the Financial Services Royal Commission and ensure all financial service providers play by the rules and put people before profits.

More specifically:

  • A 10% cap. Capping the amount payday lenders and consumer lease companies can charge, so they can’t take more than 10% each of someone’s income every fortnight (that is, if someone has both a payday loan and a consumer lease the total cap would be 20%). This will go some way to ensuring people have enough money for expenses such as rent, food and electricity.
  • Equal repayments. Requiring equal repayments over the life of a payday loan, rather than payday lenders staggering payments in an uneven way to drag out the loan term and make more money.
  • Restricting monthly fees. If a loan is repaid early, people shouldn’t be continually charged fees for a debt they’ve repaid.

More information about the Stop the Debt Trap campaign

To find out more and sign up to the campaign visit the Stop the Debt Trap website.

Further assistance

If someone is experiencing financial hardship and needs help tackling their debts they can call the National Debt Helpline on 1800 007 007. Their professional financial counsellors offer a free, independent and confidential service.

The No Interest Loan Scheme (NILS) provides individuals and families on low incomes with access to safe, fair and affordable credit. Loans are available for up to $1,500 for essential goods and services such as fridges, washing machines, school supplies, car repairs, and car registration. Visit the NILS website or call 13 64 57 for more information.

17 September 2019 |Focus area: , |Cohort: |Service type: |Location: | ,