Pay day lenders and charity collectors are cashing in on vulnerable remote communities in the Northern Territory with inadequate or limited knowledge about financial services, a report by South Australia’s Flinders University said.
The report, prepared in collaboration with Catholic Care NT, recommended 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 pay day lenders that the clients had little knowledge about. What we are talking about are blatant exploitative practices,” said Dr Jonathon Louth from The Australian Centre for Community Services Research at the university.
Dr Louth said the research showed the practices were occurring because financial products and concepts were 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 percent,” he said.
“In the end, they paid back $52,000 for an overpriced used car that had long since stopped working.”
Dr Louth visited 14 communities across the NT last year.
“What was evident from speaking to community members, is that there was genuine desire to know more about financial services,” he said.
“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.”
NT Minister for Social Services, Dan Tehan, launched the report in Tenant Creek with Minister for Aboriginal Affairs, Nigel Scullion.
It came as the banking royal commission investigated concerns about unethical conduct from finance companies, including funeral insurance companies, accused of targeting Aboriginal and Torres Strait Islander peoples with unsuitable products.
National Congress of Australia’s First People called on governments and authorities to act to end the financial exploitation of Aboriginal and Torres Strait Islander peoples by financial companies.
“It is criminal that companies, including funeral insurance companies are taking advantage of any vulnerable person, especially Aboriginal peoples in regional and remote communities.” Congress co-chair Rod Little said.
“This is a matter we have been calling for action on for some time, however we feel we have been ignored by governments.
“It is commendable to see the Royal Commission finally drawing attention to this issue. However, we want to see this new evidence translated into affirmative action. This has gone on unaddressed long enough.”
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was set up in December. It will deliver an interim report by September 30 and a final report by February.