Families Commission to host problem debt forum

Families Commissioner Gregory Fortuin has joined the chorus of criticism levelled against finance companies offering incentives to families to take out debt they cannot afford, and hopes a forum being hosted by the Commission will develop meaningful solutions.

In a study the Families Commission is due to release in December, families using budgeting services described their experiences with finance companies and other creditors. The Commission is planning to host a forum with government departments in November to promote policy solutions to reduce and prevent families from getting into problem debt.

“Families and budget advisors told the researchers about some less than acceptable practices, including offers of prizes and incentives to get into debt over Christmas,” says Mr Fortuin.

One participant told the researchers:

“Once you start paying so much off you’re getting these little letters through the post, “congratulations, come in and see us, we can lend you another $1,000”… That sort of thing, they’re always tempting you, tempting you, tempting you to go and get some more on your account.”

Families Commissioner Gregory Fortuin says that often no one else will loan to these families so the companies are able to charge high rates. It appears that finance companies are targeting people that can least afford it and have little choices in accessing money.

Families are often unaware of the high interest they will have to pay when they take out debt through finance companies. Nor are they aware of the impact of high interest rates.

“We would like to see finance companies take on responsibility for making sure people understand the contracts that they are signing, so families can fully consider their ability to pay and what would happen if they can't,” says Mr Fortuin.

The Families Commission will bring together policymakers at a forum in order to develop practical steps to reduce problem debt and the need for adequate support to help families improve their financial situation.