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Herald Sun
16 hours ago
- Business
- Herald Sun
Aussie consumers warned over ‘dangerous' wage advancing pay trend
Don't miss out on the headlines from Business Breaking News. Followed categories will be added to My News. 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. '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. '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. Originally published as Consumer advocates warn Aussies about 'dangerous' wage advancing products and call for further regulation
Perth Now
18 hours ago
- Business
- Perth Now
Aussies warned over new pay trend
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.
West Australian
18 hours ago
- Business
- West Australian
Consumer advocates warn Aussies about ‘dangerous' wage advancing products and call for further regulation
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. '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. '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.
The Age
6 days ago
- Business
- The Age
Fake payslips used to get loans approved in ‘systemic misconduct': ASIC
Staff at Westpac's RAMS home loan business submitted fake payslips from employers that did not exist to get mortgage applications over the line, the corporate watchdog says in a new court case alleging 'systemic misconduct' within the lender. The Australian Securities and Investments Commission (ASIC) on Wednesday launched legal action against RAMS, a home lending business that Westpac bought in 2007. Westpac closed RAMS to new customers in August last year. The case, which follows investigations by ASIC, alleges RAMS was in breach of the Credit Act by failing to properly supervise representatives of the company, and it says this resulted in 'widespread misconduct' by RAMS franchisees and staff. RAMS admitted it conducted business with unlicensed persons, failed to properly supervise its representatives, and failed to have proper policies and procedures in place. Westpac, which has previously acknowledged misconduct in RAMS, said RAMS was working with ASIC to resolve the proceedings as quickly as possible. Loading A statement of agreed facts submitted by ASIC said Westpac launched a review of the RAMS franchisee network in late 2022, which resulted in Westpac remediating 48 customer loans worth $7.6 million. The statement describes various types of misconduct including a case involving loan applications being supported with 'false payslips from non-existent employers'. The statement also says Westpac's internal investigations had uncovered cases where loans were submitted with the borrowers' expenses altered to allow the loan to pass the bank's credit tests. ASIC also laid out cases where RAMS representatives accepted business referrals from unaccredited 'referrers' – people such as some accountants or lawyers who are authorised to receive a commission in return for referring mortgage customers to a bank.
Sydney Morning Herald
6 days ago
- Business
- Sydney Morning Herald
Fake payslips used to get loans approved in ‘systemic misconduct': ASIC
Staff at Westpac's RAMS home loan business submitted fake payslips from employers that did not exist to get mortgage applications over the line, the corporate watchdog says in a new court case alleging 'systemic misconduct' within the lender. The Australian Securities and Investments Commission (ASIC) on Wednesday launched legal action against RAMS, a home lending business that Westpac bought in 2007. Westpac closed RAMS to new customers in August last year. The case, which follows investigations by ASIC, alleges RAMS was in breach of the Credit Act by failing to properly supervise representatives of the company, and it says this resulted in 'widespread misconduct' by RAMS franchisees and staff. RAMS admitted it conducted business with unlicensed persons, failed to properly supervise its representatives, and failed to have proper policies and procedures in place. Westpac, which has previously acknowledged misconduct in RAMS, said RAMS was working with ASIC to resolve the proceedings as quickly as possible. Loading A statement of agreed facts submitted by ASIC said Westpac launched a review of the RAMS franchisee network in late 2022, which resulted in Westpac remediating 48 customer loans worth $7.6 million. The statement describes various types of misconduct including a case involving loan applications being supported with 'false payslips from non-existent employers'. The statement also says Westpac's internal investigations had uncovered cases where loans were submitted with the borrowers' expenses altered to allow the loan to pass the bank's credit tests. ASIC also laid out cases where RAMS representatives accepted business referrals from unaccredited 'referrers' – people such as some accountants or lawyers who are authorised to receive a commission in return for referring mortgage customers to a bank.
