Pay day lenders and charity collectors are cashing in on vulnerable remote communities in the NT, it has been claimed.
They are ripping off people with inadequate or limited knowledge about financial services.
A report released today by Flinders University, in collaboration with CatholicCare NT, recommends expert financial assistance and a money management program to improve the financial wellbeing of remote Indigenous communities with poor financial literacy.
“We often identified recurring payments to charities and payday lenders that the clients had little knowledge about. What we are talking about are blatant exploitative practices,” Dr Louth says
Dr Jonathon Louth from The Australian Centre for Community Services Research at Flinders University says the research shows these practices are occurring because financial products and concepts are not well presented or understood in remote communities.
“One community member shared a story of how they borrowed $18,000 for a car at an interest rate of 35%. In the end, they paid back $52,000 for an overpriced used car that had long since stopped working,” Dr Louth says
Dr Louth travelled six thousand kilometres to visit 14 communities across the NT last year, accompanying teams delivering CatholicCare NT’s Financial Wellbeing and Capability Program (FWC) to conduct in-depth interviews and community conversations with frontline staff and clients.
“Outreach teams work closely with clients to identify outgoings that many of them are not aware of because they are unsure how to interpret bank statements,” Dr Louth says
When asked, only 39 per cent of the Indigenous clients interviewed could explain the concept of interest on a loan despite the fact that most of the interviewees had borrowed money at some point.
“What was evident from speaking to community members, is that there was genuine desire to know more about financial services.
“However, the practice and presentation of financial information is often limited and not accessible. This is not just about financial literacy on community, but a lack of cultural literacy by financial institutions,” Dr Louth says
The NT Minister for Social Services Dan Tehan, will attend the official launch of the report today in Tennant Creek with Senator Nigel Scullion.