Ellen Lutton over at
Brisbane Times in Queensland, Australia wrote an interesting article regarding the
payday loan industry there.
In essence, according to the author, motorcycle bikers are replacing the “mom-n-pop” payday loan locations that are going out of business because of new
payday loan laws in Queensland.
No surprise here! The legislators can regulate the legitimate payday loan companies out of existence but they can’t eliminate the demand by consumers for small, non-collateralized
loans! When are they going to figure this out!
Their well intended 48% rate cap in Queensland has simply driven consumers back to the real loan sharks; the ones who break legs!
Here’s a portion of the article.
NEW laws to control high-interest-loan businesses in Queensland have driven the industry underground, with outlaw motorcycle gangs now running exorbitant “payday lending” practices, an industry insider has alleged.
Pawnbrokers Industry Federation former president David Poole, who owns Ashgrove Cash Exchange in north-west Brisbane, said the State Government’s 48 per cent interest rate cap on consumer credit loans had put more than 200 loan centres out of business in the past six months.
As a result, the industry had been driven into the hands of bikies.
Queensland Police have refused to comment on the claim, citing operational sensitivities.
However, it is understood the state’s Outlaw Motor Cycle Gang (OMCG) Taskforce, codenamed Hydra, is investigating.
Mr Poole said the shift was a further blow for the industry, which had suffered badly from negative publicity.
“There’s now a criminal element to our industry that was not here before,” he said.
“Most pawnbrokers are honest, family-run businesses but almost immediately after the interest-rate cap was introduced, the bikies took over that type of lending and it’s gone underground.”
Since July 31, a maximum cap of 48 per cent a year has applied to consumer credit contracts in Queensland.
The cap includes fees and charges on the loan.
The laws were designed to protect vulnerable consumers who had been subject to rates up to 1600 per cent from some payday lenders.
Mr Poole said the cap had impacted heavily on lenders’ profits and the fallout from the closure of many businesses was “huge”.
“We’re talking over 200 mostly family-run business forced to call in on all their loans, each business with hundreds of loans,” he said.
“Can you imagine how devastating that is for the poor clients being called in, having to come up with the money all of a sudden?”
Read the entire article here:
Brisbane Times of Australia…
