The industry says it’s providing a line of credit to people with nowhere else to go amid financial pressures, but advocates say it’s a legislative blind spot.
Pawnbrokers say customers with nowhere to turn are pawning their personal items to cover household bills amid spiralling costs, as advocates say greater industry regulation is needed to protect vulnerable consumers.
Ash, , an employee of more than 25 years at chain Happy Hockers, said the current economic cycle had prompted more people to come in to take out loans against their possessions. Cash Converters, which operates more than 150 stores in Australia, has acknowledged the contribution of cost of living pressures towards higher revenues.Unlike other lenders, pawnbrokers are not fully covered by federal consumer credit laws, and data on the industry’s growth is scarce. But the ASX-listed Cash Converters, which has more than 150 franchises in Australia offering both pawnbroking and short-term loans, last month posted revenues of $382.
The client was able to get her possessions back because the pawnbroker was signed up to the ombudsman, the Australian Financial Complaints Authority. Tacon is among those calling for more uniform laws around pawnbroking, amid concerns that recent regulation of buy now, pay later and payday loans may push the most vulnerable consumers back towards what is sometimes called the world’s “second-oldest profession”.
Herron says he doesn’t think more legal protection is needed for his customers, most of whom are repeat clients.O’Brien said they often paid some of the highest interest rates of any loans , but she warned against pawnbroking being “regulated out of existence” for those without an alternative.
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