Small amount loans and payday lending

Katherine Bowden Hello everyone The webinar is being recorded so you'll be able to access it at a later date

It's going to go on our information for community workers and carers page, which is on the Legal Aid Queensland website If you haven't had a chance to look at that page yet please do after the webinar, because there's a lot of information that's useful for community workers there I've got you all to raise your hand already to test the technology, so thank you for that So this is what you should see You should have your control panels along the side and most of you will be logged in using microphone and speakers

We've uploaded two handouts today The first one is the PowerPoint, so feel free to go ahead and download that now If you can't see the handouts box it's just on the right hand side toolbar The second handout today is a useful factsheet for you based on today's webinar So you can download that at any time throughout the webinar

If you have any questions we'll be saving those until the end So Paul will let you know when he's calling for questions, and we've already got a few that have come through before the webinar that we'll save for then as well So if you haven't yet asked a question, please do save it until the end You'll see a questions box which would have been around the same area as the handouts box, and you can type in there That goes directly to us; no one else can see those questions

But please remember don't use any clients' names and just use examples only for your questions If it's not answered today, you can email webinars@legalaidqldgovau and that email address is on the handout as well

Alright we're going to launch a poll and the question is what area do you work in? Now we know we've got the majority of you from Queensland and we've got some people from interstate as well So if you are from interstate just tick outside of Queensland and if you're from within Queensland then please select Southeast Queensland, Far North Queensland or Regional Queensland I can see that we've got some responses already; thank you I'll just give you a few more seconds to vote there; we're at about 80 percent Alright we'll close the poll there

We're just going to share that on your screen now So you guys will see that 42 percent are from south east Queensland, next to that we actually have 33 percent of you from outside of Queensland and then we've got 14 percent from regional and 11 percent from far north Queensland Ok we’re going to go ahead and run a second poll We're just wondering how much you guys know about Legal Aid Queensland already So if you don't live in Queensland then feel free to select two options, the first option is down the bottom there not in Queensland, and then let us know if you have a high, good, limited or no knowledge of us

For everyone else just tick the one box please So that's just launched now So far we can see that most of you have a good knowledge of Queensland which is good to see Next to that is a limited knowledge – hopefully you'll learn a lot more with us today as well Okay so we'll close that there and share the results on the screen again

You should see that 33 percent of you have a good knowledge of Queensland which is great, and next to that is a limited knowledge Alright now because we did start late today, we're still going to take the hour, so the first part of the webinar will be Paul presenting, and the second half will be for question time So I apologise if you have meetings that you have to rush off to, but hopefully most of you can still stick around for the question time So Paul Holmes is our presenter today He's a senior lawyer in the Civil Justice Services team

I'm sure many of you have already seen his previous webinars with us I'll pass you over to Paul and go ahead and share that webcam So you should see Paul on screen there now Paul Holmes Welcome ladies and gentlemen Just confirming you guys can hear me

What I'm proposing to do today and to just quickly go over the outline, is just go through what I consider the basics around going through payday lending What we need to look at are the things around what I think are most important for you guys as community workers, when it comes to outlining payday lending So I don't propose to spend much time just going through the outline, I want to dive straight in for you The first thing I want to say is most of this law is national legislation, the National Consumer Protection Act and within that the National Credit Code The only thing I would say, given we've got some interstate people on the line, is just be careful about the rules people can use to enforce debts, because they vary from state to state and are often enforced in state courts

So if you're in a different state and have questions about that enforcement type procedure in your state, I'd recommend you contact your local Legal Aid Commission or your local community legal centre or in some states there are specific consumer credit legal centres So if you need contact details about any of those, please feel free to shoot us through an email and we can put you in touch with the right people The other thing I would say is given the late start, if you do have to leave early and have questions I haven't got to, I'd also recommend you shoot us an email and we can just reply to those on the email in due course The first thing I want to talk about is what are we talking about in this space On that side you can see there are really four categories

One being payday loans, which used to be loans between paydays so 15 days or less Happily, from my perspective, those loans are now banned under the legislation Next beyond that are small amount credit loans, which are loans of between 16 days and a year, and people who make those loans are allowed to charge a 20 percent establishment fee and 4 percent a month on those loans They also have to be looking through to the next criteria, which is medium amount credit contracts In that space we're talking about loans of between $2001 and $5000

They're allowed to charge a $400 establishment fee and a 48 percent interest rate For loans above $5000 they're allowed to charge a flat 48 percent interest rate The usual question I get at this point is why are the interest rates so high? Just to give you a bit of context, at least in Queensland before an interest rate cap was introduced Now in this unit of Legal Aid we used to see interest rates in the region of 300, 400, 500 percent per annum, and the highest we ever saw was in the region of 1600 percent per annum So in terms of good legislation that's helping our clients, I think this is pretty good

Next in the space is what do people need to consider? If somebody walks into a lender offering a small amount credit contract or a medium amount credit contract, what do they need to do? The legislation is phrased, and I'm one of those people who hates double negatives, but the legislation is phrased around a lender must enter a consumer into a loan that is not unsuitable It's not that they have to enter somebody into the most suitable loan, it's whether it's not unsuitable in their circumstances, and it recognises the idea that there may be more than one product that a person could legitimately enter into Now in doing that, they have to make a number of enquiries One is they actually have to look at a person's financial situation and make reasonable enquiries about that I'll go into a bit more depth about that very shortly

But that looks at the idea that there's actually some requirement now for lenders to have a look at the person's expenses and their income, and actually have a good think about well could this person actually afford the loan And I think that's really important The second thing they have to do is make reasonable enquires about a person's requirements and objectives in seeking the loan And that's shaped around the idea that that's an important consideration in determining whether a product is not unsuitable And then thirdly, and in particular, when in the small amount credit contract space, they have to take reasonable steps to verify that consumer's financial situation

Now in that context, a loan is considered not unsuitable if a consumer cannot meet their financial obligations under the contract, or cannot meet them without substantial financial hardship Where the debate starts off in between consumer advocates like me and yourselves and the lenders, it's often around substantial financial hardship, because there's at least a suggestion that if somebody wants to enter into a loan that's really important to them and they're prepared to wear a little bit of financial hardship, then that loan is not unsuitable But where it's substantial financial hardship, then that loan is arguably unsuitable That line can often vary depending on whether it's a consumer advocate's perspective or a lender's perspective, and that can often make negotiations more difficult The second part we look at there is this idea of the loan not meeting the consumer's objectives and requirements

That's often a difficult one in the sense that a consumer might want to buy a very expensive car, but if they can't afford it without substantial financial hardship, that shouldn't mean that they still get the loan The other thing that's worth considering in this space is whether or not the contract is unjust That looks at the ideas of whether people understood what they were getting themselves into, whether they were in a position to understand the contract at all That's often very factual and it's often worth having a discussion with a lawyer or with each other asking is this a contract that should have been given in the first place If it's not, these are ideas that should be explored

Now, the other idea I want to talk about is what is involved in making reasonable enquiries about a person's financial situation This for me is one of the really important bits about when we're making a loan and when we're linking, because they determine whether the client is able to meet the loan or whether they're not One of the things I want to talk about is how do lenders go about making this determination? Would they meet their obligations to verify a person's financial situation, if they went about processes that I'm now going to talk about? One is can they meet an obligation to take reasonable steps to verify, and the important bit here is, an individual consumer's financial situation by using a benchmark One of the classics I've seen previously is they might apply the Henderson Poverty Index, which is an index that looks at what is the bare minimum somebody needs to survive Do you know what's really dangerous about that? For me, that treats everybody the same and that's not the ideal situation when we're talking about making an assessment about a person's individual circumstances

So if somebody was to use a benchmark and just a benchmark, I have serious questions about whether reasonable steps are being taken to verify that person's circumstances But if somebody was to use the benchmark as say a starting point, and then look beyond that to what that individual consumer's experience actually is, then that's probably okay Similarly, if you're going to just allocate a percentage of a consumer's income to basic expenses, and the classic is say 15 percent for rent or 15 percent for food, on its own, I don't think that's enough The reason I don't think that's enough is in my experience, a lot of our clients have unusual expenses, whether they be the fact that they have to use a high proportion of their income to pay towards rent, or they might have larger medical expenses than usual, or they might have six children and that means they spend a lot of their money on food and other essentials So again, if you just use a percentage of the consumer's income, I'm not sure that's enough

But if you use that as a starting point and then also look at a person's expenses, then that might be okay That's why I say looking at a consumer's actual income and expenses is actually really, really important The reason I say that is really, really important is because the obligation is to verify that individual consumer's financial situation If you're going to do that and do that to the best possible result for the consumer, you've actually got to analyse the actual income and the actual expenses In today's world, the sorts of things that we spend money on are often by via direct debit

Bank account statements actually give you a really good picture of a person's income and expenses, because the income is usually direct credited and the expenses usually come out as a direct debit Now we're just going to run another quick poll because I'm interested in what your experience is out there Poll number three is during your practice, have you heard of a payday lender or another lender using a benchmark to assess expenses; using a percentage, both or none of the above So we'll just leave that going for a minute to see what sort of response we're getting, and interestingly, so far we're looking at about half of you haven't seen either practice used, and then we're talking maybe fluctuating around a quarter who have seen both, and interestingly about ten percent of you have seen one or both So that's a really interesting idea, because what that says is probably different companies, I think, have different approaches

That's often why it's really important to look really closely at the documents you get from lenders, because that will show you, as we close that poll now and share the results – what I think that shows you is because companies have different approaches, taking steps like getting hold of the documents, which you're entitled to under the National Credit Code, are really, really important because that will show you what that individual company's approach actually is Now to move along to the next slide What we're talking about then is what requirements are there? I've gone too far on the slide, my apologies A lot of this we've already talked about in the previous slide, because what that looks at is things like – have you had a proper look at the expenses? Have you actually engaged with the consumer about what's currently happening, why do you need this loan? If you're asking for this loan for basic expenses like rent or something that might be available through a NILS loan – I know we've probably got some NILS providers on the line Have we looked at all of those alternatives, which often are less costly than obtaining a small amount or a medium amount credit loan? Feeding into that is if you've got that need or objective, are there ways of achieving that need or objective without taking what, in my opinion, is an expensive product, particularly when there are alternatives out there like the NILS scheme? Just moving on, the next thing I want to talk about are small amount credit contracts, because the requirements placed on small amount credit contract providers, are actually more onerous than other lenders

The reason they're more onerous is the government took a view that the detriment that can be caused by these loans being given incorrectly to people who actually cannot afford them is actually really serious, because more often than not, in my experience, people trying to obtain these loans are people who are on low incomes or on Centrelink, and are not in a position to easily pay them back So the sort of presumptions that are in place that are really important are if you're getting more than 50 percent of your income from Centrelink, repayments on a small amount credit contract or multiple contracts, can't exceed 20 percent, and that's really, really important Feeding into that is if they obtain three months' worth of a customer's bank statements, and not just obtain them, because most companies are fairly good at doing that, you've actually got to look at the data that's in the bank statements Like I was talking about before, they show some really important stuff about where the money is going and what sort of income you're actually getting in, because Centrelink direct credits and nearly all employers also direct credit Similarly, if someone has done you a statement of financial position and it shows some capacity and yet the bank account is hovering around zero every fortnight, personally I'm asking serious questions about where that extra money is going

Similarly, there's a rebuttable presumption that if somebody already has two small amount credit contracts, the third is going to be unsuitable Now there are some lenders out there that I'm aware of that have a practice that if somebody already has two small amount credit contracts, they just don't make third one, because they believe it would take or be too difficult to rebut that presumption But I am aware of some lenders who will try and rebut that presumption, and I am aware of people who have had multiple loans over multiple years, who just keep going back to get a new loan every time the previous loan expires While that may not fall foul of you having three small amount credit contracts at once, where you're rolling over small amount credit contracts like that, I'm actually asking a serious question about whether you can afford that without significant financial hardship The reason I'm saying that is if you're having to get another loan to pay the previous loan, that's not a good thing in my perspective because that's creating a debt spiral and that's creating a dependence on obtaining a loan, which is not going to help somebody financially

The other important thing is if you're already in default on a small amount credit contract, it stands to reason that getting another one is going to be unsuitable Because if you can't afford to pay one, the chances of you affording to pay two are not high The other most important thing for our clients is if you're getting a small amount credit contract, the person who's giving you that money can't take security, and that's over things like a car For our clients, particularly in regional areas, they depend on a car to get themselves around and to get to work The other thing I wanted to raise is let's just say the loan has been properly given and there's no issue and they can afford it and their circumstances change

It's really important, I think, in that context to remember that what we have is we can still ask for hardship, because when the loan was given and the assessment was done properly that's fine But the National Credit Law still provides protection to our clients if their circumstances change and they can no longer make the payments Although they're directed at your short term change of circumstances, in my experience, a lot of lenders are very approachable, but if there's a long term change of circumstances, they'll try and work with you So at least the starting point is to at least engage around hardship, even if the loan has been properly given in the first place The other really important thing, I think, that's worth to discuss is let's say the legislation has in fact been breached

What's the sort of stuff we can ask for? If a loan has been irresponsibly made, one of the things I find a lot of people head straight to is well the loan should be waived Unfortunately, the law is not set up like that because there's a recognition that if somebody has obtained some money via a loan, they, more often than not, put the money they've obtained to some benefit to themselves or their family In those circumstances at least, my view is a fair result is usually that the interest and fees be waived and an affordable arrangement, without interest being entered into, to pay back the principle amount that's been borrowed Now I recognise there are exceptions to that depending on the client's circumstances, but as a general rule, that's usually my starting point When we have that starting point that at least, I find, starts the dialogue and discussion with the lender on the outside

As I said earlier, it's important, always, if the client's circumstances have changed or were not good to begin with, part of any resolution is hardship, because if they can't afford the loan they can't afford to make those repayments Just to talk a little differently before we enter into the question time It's important to remember that consumer leases and payday loans are very different things And the consumer leases, although there's hardship requirements under consumer leases, they're regulated by their own section in the National Credit Code There was recently a review undertaken by Treasury looking at whether that's a good thing

At least the suggestion, as I understand it, was made as part of that review is that they should be subject to similar cost and fees requirements as are small amount credit contracts Given it's a market that deals with very similar clients, the idea of treating similar or like products in the same way legislatively is probably a fair way But given the election and what will happen following it, it's something we're waiting on to see whether the new government wants to pursue any of those recommendations It's not for me to say whether they will or not Finally, the other thing I want to just quickly do is just check in to make sure, in this final poll for today, did you know consumer leases are regulated differently to the way small amount loans were regulated, with the obvious caveat with the exception of the hardship requirements

So we're just going to run that poll very quickly And just give you a few seconds to respond to that What's really interesting to me about those early results is nearly half of you weren't aware of that difference and it's probably something that isn't very well publicised by the consumer lease companies, because I think we all assume that because they're very similar products they're likely to be regulated in the same way So as we just share that poll, that's probably worth remembering that for whatever reason sometimes the legislation doesn't treat like products in the same way It's really important to remember that and always check, because sometimes you get pleasant surprises about how they're regulated and the regulation which helps to – Now, just moving to the final issues before we talk about questions

This is one of those circumstances where how it's regulated differs between state to state Now pawnbrokers are where – most of you are going to know this already, but pawnbrokers are where our client's take a good of theirs into the pawnbroker, they get money by leaving that good as security, and they can only redeem that good by paying the pledge amount What often happens is once our clients have pledged the goods, are unable to afford to redeem the pawned good The resolution that the company is able to take in those circumstances is very different Their resolution is they're then allowed to sell the good, and that's regulated in Queensland by the Second-hand Dealers and Pawnbrokers Act

Importantly for our clients there's no obligation in the legislation to consider hardship on a pawned good, which is very different to payday lending and consumer leases and everything else in that credit space So it's really important that you remember that Finally, for those in Queensland for those of you who may not have dealt with us before, we have a Consumer Protection Unit that provides advice on credit and debt; so all of these issues If you want to get in contact with us, I don't believe we put the contact sheet up as one of the handouts, but if you've got those sorts of questions – the contact sheet is up I'm being told Katherine Bowden The email addresses are there

Paul Holmes The email address is there Please feel free to send us an email We're happy to at least give you a starting point Is it us? Yes you should book the client in the advice, and then get them to call the call centre We're also happy to have conversations with you in circumstances where you're not sure where to go next when it comes to issues like that

So if that's something that you're interested in taking us up on, we are very friendly and I would encourage you to do that I am aware that there's a number of you online who we do have regular conversations with, and I welcome those conversations because they're often very robust and we often get really good results for the client as a result by us working together with financial counsellors, community workers and people helping the vulnerable out there in the community So that's really important Just really quickly for those of you in Queensland, I won't spend much time on this slide, but there's a slide there reminding you of where all of our offices are It's important to remember that we do do a lot of phone advice so if clients are not in any of those areas we can still link them in for legal advice about all of those issues

Katherine mentioned earlier the website that we have, and the specific section of that just for community workers If you haven't used that website, I'd recommend that you have a look, because one of the other advantages of that website is all of Legal Aid's factsheets are up there for you to order for free, and if you've got any questions about doing that, please email them to us and we're sure to point you in the right direction Similarly, there's the phone numbers If you've got a client that needs legal advice, please get them to ring any of those numbers and our excellent people in the call centre will be able to book them in for the right advice session The advice is usually very quickly obtained

Now, we're on to questions Now there's already a number that's really important So what I'm going to say or what I'm going to start with is there's one on bankruptcy The thing about bankruptcy, and while I'm starting on these earlier questions, if you've got new questions please feel free to start sending them through and I'm going to answer as many as I can The first one that came through was regarding bankruptcy and whether it happens often that somebody might be made bankrupt over payday lending or small amount credit contracts

Now the starting point always, for me, is that in terms of a creditor making somebody bankrupt, what they need to do is they actually need to have a debt of more than $5000 That can be made up of one debt or that could be made up of a number of creditors coming together to make the total more than $5000 So while the debts are below $5000 that's not a possibility And in my experience, I don't see very many people being made bankrupt over just small amount credit contracts Where I see people being made bankrupt is often where they might have a couple of those debts and it might be a number of large credit card debts or a large number of personal loan debts

So in my experience, not yet Other issues; and this is one we touched on earlier and it's the idea of multiple loans The answer is, in theory, you can have multiple payday loans or multiple small amount loans where a lender can show that those loans have been responsibly made and that the person can actually afford to make them If they can do that and rebut that presumption I talked about earlier, then that is legitimate My experience though, is that's not something that usually people are able to show

The other variation of that is a lender will often say well I didn't know about the earlier loans That goes back to the three months' worth of bank statements that I talked about earlier There are very few payday lenders I know of or small amount credit contract providers that I know of who do anything other than take their payments out as a direct debit, because then they're certain that they're going to get their repayments on time and in the right amount, and they show up on bank statements So I don't accept, personally, the argument that subsequent lenders should not know or can't know about earlier loans The only caveat I put on that is the circumstances where they might have taken out the loan the day before and the payment hasn't come out

Even then, there's still a requirement to assess whether they can do it responsibly There's another question about why we use a benchmark for 30 percent of income as rent, and I'm assuming that's in the context of doing a statement of financial position as a financial counsellor Like I said earlier, I'm not saying benchmarks are bad, what I'm saying is benchmarks on their own often won't give you a true picture of a person's actual circumstances I'm a big fan of treating individuals as individuals, because where you're treating individuals that way you get a much better perspective of where they're at, and usually you get a much better perspective of what they're options are and what they're best alternatives are So in those circumstances it's not that I say benchmarks are bad, it's that I say if you are going to use benchmarks they should be used in conjunction with having a proper look at what that person's individual circumstances are

Another interesting question was in the idea of bank statements, since we're on them, is whether we see problem gambling in those bank statements and whether that's well identified In that context it's probably not so much that you identify problem gambling very easily, I think it's more the idea that in doing a statement of financial position in conjunction with the bank statements, you probably identify that there's missing money, or you probably identify that there's repeat withdrawals from a similar source in the pub or club If there's missing money in those circumstances, then I'm thinking another question should be asked That's the way I'd go about it So it's not so much that they should be identifying the problem gambling, it's that they should be identifying that there's missing money

The other issues that were rightfully raised is whether Google's banned payday lenders from advertising I'm obviously not going to comment on the appropriateness or not of Google doing that, because that's their decision as to whether they would do that or not I would obviously just say this; anything that is appropriately and legally done that is of benefit to vulnerable consumers is a good thing Now the next question to quickly look at is this idea of what happens once you've established that you've breached the National Credit Code or you've breached the National Consumer Protection Act and that the loan shouldn't have been granted? Usually the first step for me is to go back to the lender and say okay we think you shouldn't have given this loan and here's why You'll say because you didn't assess their expenses properly or you didn't obtain a bank statement properly, or you didn't meet your obligations under the code

Then they have an opportunity to respond In my experience, some of the times the lender will say yes you're right In circumstances where they don't your next step is to lodge a complaint with the Ombudsman Most people will be a member of the Credit Investment Ombudsman in this space, but some are also a member of the Financial Ombudsmen Service In my experience, both those Ombudsman are very good at having a practical look at what should actually have happened under the circumstances

That's a good way of looking at it The next issue; if the client has paid over the value of the item and interest isn't fair to request a debt waiver So just to clarify that question, I'm assuming that's in the context of a consumer lease rather than a payday loan, because in the context of a loan my experience is the item being bought is often not in that context or that situation So in the consumer lease experience, what I often find is there's an issue with people paying three or four times the value of the good, and in those circumstances yes I will often ask for a waiver because not only are they overpaying for the goods, often, in my experience, clients believe that they are actually buying the good at the end and don't understand it's a lease that they're ultimately then returning In those circumstances when you can show that lack of understanding, and you can show that overpayment, I find a lot of companies are happy to talk to you about debt waivers and transferring ownership of the goods

But it's always important to consider the person's individual circumstances The next question, and keep those questions coming in, is around the idea of online lending In the age of technology that we currently have, and I'm sure we've all seen the ads where you can get a response very quickly on your mobile phone, or you can get a response very quickly when you jump online That's fine; you can get a response within 24 hours or sometimes quicker That might give the impression that there's less regulation or it's easier to get loans in those circumstances

To be honest and in my experience, that's certainly not the case, because online lenders if they're lending into Australia are subject to exactly the same requirements as shopfronts or storefronts when it comes to assessing a person's income and expenses, assessing whether or not that loan is not unsuitable, and then making a sensible decision about whether or not that person can make those repayments without substantial hardship In those circumstances it's really important to remember that just because it appears easier to get, doesn't mean there's any less requirements on those lenders I would be assuming, although I'm not aware, they've probably have some very sophisticated technology to analyse the data that they're supposed to get in such a short period of time If they're not analysing the data properly, then they're on the hook in exactly the same way as any shopfront that is making a loan and not analysing the bank statements or not meeting the presumptions against the loan being unsuitable, or granting a third or fourth small amount loan when a client already has two, three or in some cases more So it's always really, really important to remember that

It's important to keep those questions coming through The other thing that I think is really important to remember and I talked about this earlier, is when we're dealing with, and this is a good question, is clients who are coming in crisis and are unable to pay loans like this Our immediate response and I think it's a response we all make, is this idea well we need to help them with a hardship application on the loan That's right, but I think there's a second really important question to ask there, and that second important question to ask is when did this hardship start? If the hardship started almost immediately after they got the loan, then I'm asking the question about whether that loan was responsibly made in the first place In those circumstances it's important, not only to make a hardship application, but it's also important to get them to respond to the idea of how they assessed that a client could have responded to this loan at all

I think that's really, really important to remember that, because if we're not doing both of those things, we can be doing our clients a disservice, because, as I said earlier, the consequence of an irresponsible loan is that amount of money that they're required to pay back is being reduced Another question coming through that I'll just quickly deal with is this idea of how should casual income be treated and the fluctuations that occur in those circumstances? This can be difficult because I'm sure you guys have all seen the increasing casualisation of the workforce out there, and you'll see people who have been in a casual position for four or five years earning very similar amounts of money across each fortnight In those circumstances there's an argument to say that there's at least a consistency of income that you can make the loan on If a person has been in a casual role for a month or two, then I'm less comfortable with the idea that you've got consistent evidence about that person's income, and where you don't have that consistent evidence about the income I think it's dangerous to assume that that casual income is going to continue to increase Another really good question is this idea around extending loans whereby you might pay a big repayment upfront for the first six months of the loan and smaller repayments for the last six months and the consequence of that is what this allows is that 4 percent monthly interest fee and that 20% admin fee to be charged for more months

I know there are many in the industry whose view on this to me is different, and so there's been the odd robust discussion on this I would question whether it is in a client's interest if they can afford to make the higher repayments for the first six months, I want evidence of for what purpose do they suddenly want to reduce the repayments so that they continue to have a loan on foot In most circumstances in my view, it's always going to be in an individual consumer's interests to pay that loan off as quickly as possible, because that means less interest, less fees and if they successfully paid that loan off, that's often good evidence that that person might actually be able to get a new loan from another provider or a new loan in other circumstances To link to that is this idea of does a payday lender has to sight the bank statements for every loan? My view is I don't accept the idea that just because somebody has been a good payer in the past of payday loans, that that necessarily means their current circumstances or their current statements means that this new loan is something that they can afford to repay Particularly given as we were talking about earlier issues around employment situation isn't great at the moment, there's the casualisation of the workforce – people's circumstances do regularly change

If they do, and that person hasn't or that lender hasn't got up to date bank statements, or the last bank statements were six months ago, nine months ago or 12 months ago, I think that's a problem, because you're running the risk if you're the lender, of those circumstances changing, and where they do, I don't think you're meeting your responsible lending requirements to assess that person's individual circumstances The evidence would have shown those circumstances have changed Another difficult question is around what to do with child maintenance In terms of what to do with child maintenance, one of the queries I have about how you deal with that, is often child maintenance payments aren't consistent, because people have difficulty in making those payments on time or, in some cases, they just don't make them So I think it's dangerous in those circumstances to rely on those payments being made or assuming those payments will continue to be made

In those circumstances, I would be reluctant to have that discussion or to assume that I could rely on those payments being made in order to assess whether somebody can properly repay Now we've probably got maybe about five minutes to go, so if you've got any final questions I'd encourage you to put those in now In terms of the next question which is around signing a contract that has gone past the cooling off period That's often an issue in Australian Consumer Law and there are specific requirements whereby that cooling off period could be extended to between three and six months I don't propose to go into that now, because it's a little more involved, but if you've got a specific question maybe with specific facts and you've asked in that context that you wanted to talk about, I'm happy to respond to a more detailed email if you want to send that through to me

Similarly, the next question we're dealing with is around an indefinitely lease and the fact that the person has paid an awful lot of money over that time I'd have a serious question about if that person wasn't aware that that lease was going to go and continue to renew itself almost, I'd ask questions about what are we leasing? If it's a good that has a shelf life of maybe two years and is now redundant and they are still leasing that on an indefinite lease four or five years later I'm seriously questioning whether that's a fair contract or a just contract I'm starting to think in terms of are there unfair terms here about was that contract properly explained, and again that's probably a definite discussion I'd like to take offline if you want to send me some more details or continue that discussion, because that's going to very much depend on what's in the contractual term itself In terms of asking for a debt waiver and the person responding about failing the loan – I always get worried when a creditor or a lender talks about failing something, because I tend to equate that with default

I could be wrong about that, but when I hear fail I think default and I think that's really, really dangerous The question, I guess, to ask there is, is there a risk that if you go back and ask for confirmation it's been waived, what potential consequences are there? I tend to think it's worth confirming that that means you've waived the debt, because if they're thinking seriously and they're continuing, that's got a bad consequence to the client and they're going to do that regardless of how you've interpreted the loan and what they have said If they haven't gone and default listed the loan, there's no harm in confirming an answer There's no harm in asking the question for your peace of mind and your client's own peace of mind In terms of final questions, I think it's probably a good point to leave it off there

There's one final question that has come in around the idea of still being able to buy at the store involved but not get loans To me, that sounds like default regarding failing a loan, because if they can't get the loan, rather than defaulting them what they might have put them on is a no lend list So it's probably in that circumstance where it's confirming there was no default listing made, and it was just an internal decision not to give them any further loan In closing Katherine Bowden Paul, just one last question; do you want to let the audience know if they were to take something away today, what would be the most important piece of information that they could take with them? Paul Holmes I think in closing I'll probably say two things about take aways One is the earlier point I talked about around looking at both hardship and irresponsible loans, because the crisis we often see our clients in is really easy to focus on just the hardship when focusing a hardship and the irresponsible loans allow you to often get a better result for the client The second thing I ask you to take away is keep an eye out for the use of these benchmarks and these percentages that we were talking about, because although I don't think they're wrong or bad, I think they should be used in conjunction with other things such as looking at the person's individual circumstances and focusing on those So they would be my two big take aways

Can I thank you guys very much for your involvement with questions today and for your unbelievable passions as we battled our technical difficulties this morning I reiterate what we both said earlier, which is if there's questions that we didn't get to or missed by mistake or you think of questions later about these topics that you want to talk to us about, please send us an email and we're happy to provide you an individualised response to all of those There's a survey at the end – I'll just pass you back to Katherine to explain that Katherine Bowden Thanks Paul Thank you as well Paul for your great presentation today; it was very interesting and thank you to our audience for sticking around through those technical difficulties

The webinar will be recorded, so if you know of anyone who had to head off early, just let them know that it will be available on our information for community workers webpage, which Paul mentioned earlier As Paul said, please download the handouts If you missed the start, the handouts section is in the right hand side toolbar; there's two there You can quickly download those now and they have all the contact details and the PowerPoint slides for you Paul mentioned that there is a survey and that's created by us and it helps us to determine which webinars to present to you, and which topics are most in demand

So if you can take about five minutes to answer that for us that would be great We've got a scale of one to five, five being the highest which is written on those questions there Alright, well thank you very much everyone and we hope to see you at our next webinar