Curbing loan sharks !

One of the most important responsibilities of both the Federal and state governments is to protect citizens from unscrupulous traders who are" rip off merchants ".    This may be in the form of car yards that wind back the odometers of cars to deceive buyers about the actual distanced travelled - to  real estate agents who trick buyers into spending money on property investigations by understating the likely auction price. 

Now Barry O'Farrell's state government is moving to curb the excesses of the so-called " Pay Day loan industry ".

They have always been with us.   Years ago they operated out of seedy boarding houses and went door to door collecting small change from desperate housewives battling to put food on the table for their families.  Now they have gone " respectable " - operating from glitzy main street premises.    They offer quick cash to tide people over the gap of a few days - until the next " pay day ".

The problem is that the interest rate is crippling and the fine print adds additional costs which means some vulnerable people are never going to fully escape from debt, and this is compounded when the balance still owing at the end of the loan is " rolled over " into a new debt.

The government is going to legislate to cap interest rates at 10% of the amount borrowed, with an extra 2% each month on the balance owing.   Somebody borrowing $ 100 will then be liable for just $ 12 interest on the loan, not crazy figures such as $ 133 over the same period..  Roll-overs will also be banned.

The problem will probably shift from up-front premises to lone operators prowling depressed income suburbs - just as it was half a century ago - and the police will need to employ twenty-first century control methods to detect and clamp down on the shysters.

One thing is absolutely certain.    There will always be desperate people in need of what they think will be a " quick loan " to get them over a cash shortage.

And there will always be loan sharks with money in their pocket to service that need - at exorbitant rates of interest.

The government may manage to reduce the trade - but it will never completely disappear !