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ASIC flags payday lending concerns once COVID-19 fiscal stimulus dries up

More Australians will likely turn to high-risk payday loans when the government’s coronavirus stimulus measures run out in September, Australia’s corporate regulator has warned.

But consumer advocates believe a surge in payday borrowers could prompt thousands of Australians to enter catastrophic ‘debt spirals’ and they urged the Coalition to avoid the so-called ‘cliff’.

ASIC commissioner Sean Hughes told the COVID-19 select committee hearing on Thursday that payday lending rates would be “very much on our watch” in September.

“We are taking a proactive stance in relation to [payday lending because at] the end of the various support programs, we think there will likely be an increase in utilisation of payday lending programs,” Mr Hughes said in response to questions from Labor’s Murray Watt.