It is vital that those impacted by policies are given the opportunity to express their needs and have a voice in the policy process. This is often easier said than done. In this post, Tanya Corrie from Good Shepherd Youth & Family Service reflects on what this means for those who are financially excluded andwho access the fringe lending market. While regulation is imperative, Tanya also notes it is important to understand the underlying, cultural reasons that people prefer to 'pay their own way' rather than 'accept charity' and why this is such an emotive proposition.
At a forum the other week, advocates in the community sector were discussing the impacts that the Federal and Victorian State government budgets were going to have on the people we work with. We pondered how we could ensure the voices of those who are disadvantaged by these policies could find their way into these policy conversations, and how we could impress on policy makers just how damaging these austerity measures were going to be.
A voice in the back of the room proffered (and I paraphrase):
“Who are you to speak on behalf of these people?”
“What are you doing to ensure that they, themselves, are provided with the opportunities to contribute?”
“These people are capable of speaking for themselves!”
There are many organisations, including mine, that do their best to enable service users to represent their needs. We attempt to do this in a variety of ways – through research, case studies, developing community advocates and many other mechanisms. However, these comments do raise some very important questions. These are: at what point do we start to start to patronise service users in our advocacy efforts by speaking on their behalf, however unintentional? Are we giving those affected by policies enough of a platform to express what their needs are?
These are important reflections when thinking about recent activity in financial services reforms. We have seen first-hand some of the damage an under-regulated financial services sector can have. Mismanagement of hard-working people’s retirement savings, high cost lenders profiting from low-income people’s financial stress, and the ‘locking out’ of some low-income people from mainstream financial services are all signs of this problem. We work hard to ensure that we agitate for changes to minimise these harms and to address these market failures. We do this because we hear their stories of devastation, our programs help to pick up the pieces for people for whom these financial stressors just become too much. We do this with a full respect for the person, for the difficult choices they have had to make through bad luck or circumstance.
We do not want fringe lending to be their only choice. We know that fringe lenders do not have to be their only choice. Hence, we want to make sure that they do not go to these lengths. We know that most access fringe loans because they simply do not have enough money to make ends meet. We seek to regulate how much money can be made from these transactions, enabling fringe lending to be a less damaging 'choice'.
When changes to fringe lending regulations were initially discussed, the fringe lending sector successfully argued that the regulation, as offered, would drive them out of business.
“Good,” I thought, “it would be best if they did not exist”.
The result of their successful lobbying was a very watered down framework. It still limited fees and imposed conditions on payday loans, which was good. However, the industry has continued to flourish, particularly as an online presence. They are getting even better at marketing and mainstreaming what should be (at best) a tertiary financial service.
We, in the community and other sectors, tell people not to use fringe loans: they are expensive and will make your financial situation worse. You can come to see us. We can offer you financial counselling, emergency relief, help you negotiate with you utility companies. You do not have to go to these lengths to borrow money. We can offer you a no interest loan if appropriate. Simply put, we are attempting to offer an alternative to these high-cost options as ideally, these high-cost options should not have a place.
If there were an absence of payday lending as an option, people would choose these safer options. Or would they? This is where we (as a sector and as a society) have deeper questions to answer.
If there is fear of stigma for coming to a community organisation for relief and support, we have a deeper problem.
If there is a sense of shame in calling your energy company because you cannot pay your bill on time this month, then we have a deeper problem.
If, when you call your bank or energy provider to negotiate a payment, you are not helped, we have a deeper problem.
When we have an income support system that forces people into poverty and into desperation, we have a deeper problem.
We have deeper problems. We have a society and an economy that systematically forces people to the fringes and then blames and shames them for their disadvantage. The scourge of high-cost lending is a symptom of this bigger problem as well as a cause. The industry has done this by making their customers feel they are ‘helping them out’ when really, they are often making their situation worse.
Unfortunately, their customers feel that they are ‘paying their own way,’ and ‘not relying on charity’.
While in the short-term people may feel their immediate need is met, in the medium and longer term, the situation more often gets worse, as people cannot afford to pay their loans back. Of course, we must continue to advocate for change to this sector for all of these reasons.
We must also realise that we have a social justice problem, and in the absence of addressing some of these deeper cultural and systemic issues, we will continue to have people preferring the ‘pay their own way’ instead of ‘relying on charity’. We need to ensure that people do not feel patronised for either of the choices that they make, even when we do feel that we may ‘know best’ for them. Regulation is one very important way of changing the culture around money, rights and entitlements, and this is a battle that should continue, as well as that of a fair social security system.
We must also continue to reflect on the alternatives offered, and to challenge the stereotype of 'charity,' which forces people into these kinds of financial arrangements. This involves looking at the way we do things as well. This is a challenging but important tension to manage.
Posted by Tanya Corrie