logo
Aussies warned over new pay trend

Aussies warned over new pay trend

Perth Nowa day ago

Australian consumers have been warned about a 'dangerous' new financial product sending struggling people into debt spirals, and consumer advocates say urgent regulation is needed.
Wage advance services are advertised as offering a quick and easy way to borrow money before your payday, some offering the advances within a minute.
The products are under no obligation to assess a person's ability to service the debt or to give financial hardship assistance.
This has led to a chorus of consumer advocacy groups to call on the Albanese government to urgently regulate the services that they say make the cost-of-living crisis worse and are sending thousands into dangerous debt spirals.
Consumer Action Law Centre chief Stephanie Tonkin said she had heard from people who had taken multiple wage advance contracts and had ended up committing their whole income to repaying the loans. Consumer advocates have warned the wage advancing products are sending thousands into debt spirals. NewsWire / Nicholas Eagar Credit: NewsWire
'These products encourage people to borrow against their future income to meet their essential living needs, and this can cause serious harm when there's no extra money in the next pay cycle, only greater debt,' Ms Tonkin said.
'The fees add up very quickly if you're stuck in a cycle of borrowing now to pay more later.'
This fresh warning comes as buy now, pay later (BNPL) products are brought under the National Consumer Credit Protection Act, a long-time campaign goal for consumer advocacy groups. Buy now, pay later products face regulation under the Credit Act from June 10. NewsWire / Gaye Gerard Credit: News Corp Australia
'We want wage advance brought under the Credit Act as a priority to give people the same consumer protections as BNPL,' Ms Tonkin said.
'It's taken years for BNPL to be regulated – we can't wait that long again.'
Consumer Credit Legal Service principal solicitor Roberta Grealish likened the proliferation of this type of financial product to a game of 'whack a mole'.
'Wage advance products now need to be brought within the Credit Act to prevent the harms that the new BNPL rules hope to address simply shifting into this space,' Ms Grealish said.
Choice campaigns director Rosie Thomas said the work to close 'lending loopholes' was not yet finished.
'Consumers will continue to be harmed until wage advance is also regulated as credit,' she said.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

ASX set to open above 8600 points amid bets on easing trade tensions
ASX set to open above 8600 points amid bets on easing trade tensions

The Age

time2 hours ago

  • The Age

ASX set to open above 8600 points amid bets on easing trade tensions

The Australian sharemarket is set to jump over the 8600 point mark, entering new heights after investors monitoring trade discussions between the US and China drove stocks higher on Wall Street amid bets on easing tensions between the world's two economic superpowers. ASX futures were up 32 points, or 0.4 per cent, at 8628 as of 6.02am AEST. The projected gains would come after the bourse hit an all-time high on Tuesday, buoyed by hopes for the high-level talks in London as officials had struck a positive tone after the first day of negotiations. The Australian dollar edged up 0.1 per cent to 65.25 US cents as of 6.12am AEST. On Wall Street, the S&P 500 was 0.5 per cent higher in late trading as the talks between the world's two largest economies carried into a second day. The Dow Jones Industrial Average was up 91 points, or 0.2 per cent, with an hour remaining in trading, and the Nasdaq composite was 0.6 per cent higher. Stocks have roared higher since dropping roughly 20 per cent below their record two months ago, when President Donald Trump shocked financial markets with his announcement of stiff, wide-ranging tariffs. Much of the rally was due to hopes that Trump would lower his tariffs after reaching trade deals with countries around the world, and the S&P 500 is back within 1.8 per cent of its all-time high, which was set in February. It's getting to be time to see whether the hopes were warranted. The talks with China, which are likely covering a range of disagreements between the two countries, were 'going well,' US Commerce Secretary Howard Lutnick said on Tuesday, adding he hoped they would end in the evening UK time — but that they could stretch into a third day if necessary. A Treasury official said discussions were now centred on ironing out technical details. 'We're going to try to finish things, so that's the objective,' Lutnick told reporters outside the meeting. 'I think we're working on all sorts of trade issues and I think the talks are going really, really well.' Tom Essaye at research firm The Sevens Report, said that 'any materially positive or negative trade talk headlines out of London where US and Chinese negotiations remain underway could meaningfully move markets today' before focus on Wall Street shifts to America's inflation figures for May on Wednesday US time.

ASX set to open above 8600 points amid bets on easing trade tensions
ASX set to open above 8600 points amid bets on easing trade tensions

Sydney Morning Herald

time2 hours ago

  • Sydney Morning Herald

ASX set to open above 8600 points amid bets on easing trade tensions

The Australian sharemarket is set to jump over the 8600 point mark, entering new heights after investors monitoring trade discussions between the US and China drove stocks higher on Wall Street amid bets on easing tensions between the world's two economic superpowers. ASX futures were up 32 points, or 0.4 per cent, at 8628 as of 6.02am AEST. The projected gains would come after the bourse hit an all-time high on Tuesday, buoyed by hopes for the high-level talks in London as officials had struck a positive tone after the first day of negotiations. The Australian dollar edged up 0.1 per cent to 65.25 US cents as of 6.12am AEST. On Wall Street, the S&P 500 was 0.5 per cent higher in late trading as the talks between the world's two largest economies carried into a second day. The Dow Jones Industrial Average was up 91 points, or 0.2 per cent, with an hour remaining in trading, and the Nasdaq composite was 0.6 per cent higher. Stocks have roared higher since dropping roughly 20 per cent below their record two months ago, when President Donald Trump shocked financial markets with his announcement of stiff, wide-ranging tariffs. Much of the rally was due to hopes that Trump would lower his tariffs after reaching trade deals with countries around the world, and the S&P 500 is back within 1.8 per cent of its all-time high, which was set in February. It's getting to be time to see whether the hopes were warranted. The talks with China, which are likely covering a range of disagreements between the two countries, were 'going well,' US Commerce Secretary Howard Lutnick said on Tuesday, adding he hoped they would end in the evening UK time — but that they could stretch into a third day if necessary. A Treasury official said discussions were now centred on ironing out technical details. 'We're going to try to finish things, so that's the objective,' Lutnick told reporters outside the meeting. 'I think we're working on all sorts of trade issues and I think the talks are going really, really well.' Tom Essaye at research firm The Sevens Report, said that 'any materially positive or negative trade talk headlines out of London where US and Chinese negotiations remain underway could meaningfully move markets today' before focus on Wall Street shifts to America's inflation figures for May on Wednesday US time.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store