In response to a request by the Minister to provide a proposal for an effective and workable regulatory regime for Queensland microlenders.

As the Minister will recall, this proposal is presented in accordance with the Minister’s request, during the ministerial meeting with a delegation from the National Council of the National Financial Services Federation (NFSF) on Thursday October 18th, 2007.

The proposal is designed to present an appropriate structure of regulation, which will balance consumer protection with the continuation of a viable and legitimate Queensland microlending industry.

It is hoped that the Minister and his Cabinet colleagues will have the opportunity to closely examine the contents of this proposal and that there will be an opportunity for the ALP Parliamentary Caucus to consider it, as part of its forthcoming deliberations on the regulation of microlending in Queensland.

In response to a request by the Minister to provide a proposal for an effective and workable regulatory regime for Queensland microlenders.

As the Minister will recall, this proposal is presented in accordance with the Minister’s request, during the ministerial meeting with a delegation from the National Council of the National Financial Services Federation (NFSF) on Thursday October 18th, 2007.

The proposal is designed to present an appropriate structure of regulation, which will balance consumer protection with the continuation of a viable and legitimate Queensland microlending industry.

It is hoped that the Minister and his Cabinet colleagues will have the opportunity to closely examine the contents of this proposal and that there will be an opportunity for the ALP Parliamentary Caucus to consider it, as part of its forthcoming deliberations on the regulation of microlending in Queensland.

Payday loans are widely condemned as a “predatory debt trap.” We test that claim by researching how households in Georgia and North Carolina have fared since those states banned payday loans in May 2004 and December 2005. Compared with households in all other states, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate. North Carolina households have fared about the same. This negative correlation—reduced payday credit supply, increased credit problems—contradicts the debt trap critique of payday lending, but is consistent with the hypothesis that payday credit is preferable to substitutes such as the bounced-check “protection” sold by credit unions and banks or loans from pawnshops.