Westpac to stop funding payday lenders

Westpac announced on Tuesday that it has made a “commercial decision” to cut off from payday lenders. The move comes after the bank was in the news earlier this year with a number of media reports linking it to payday lenders that have acted unethically or unlawfully.     

Payday lending refers to a kind of short-term loan where an individual borrows a small amount of money at a very high rate of interest.

“Westpac can confirm today that after careful consideration, we have made the commercial decision to exit customers who provide ‘payday’ lending products and will no longer support new customers where we are aware that they provide ‘payday’ lending products,” said a Westpac spokeswoman.

While the bank will be pulling away from customers who offer payday lending products, the spokeswoman also said the bank was working with its affected customers as they tried to find alternative banking services, reported the SMH.

"We will honour existing contractual obligations as they manage this transition," she said.

Money3 Corp, a short term finance company, made a statement to the Australian Securities Exchange yesterday, saying Westpac had given them notice that it would end their banking relationship.

Money3 acting chief executive Scott Baldwin said it had a debt facility with Westpac that had been drawn down by $10 million, and it had the capacity to repay this loan with existing cash flows. He said it also had a separate $30 million corporate bond facility that would not be affected by Westpac's decision to pull out of the sector.

Westpac is also known to be a lender to Cash Converters, which recently settled a class action claim in New South Wales over excessive fees. According to The New Daily, Westpac’s decision comes as the social justice law firm, Maurice Blackburn, launches another class action against Cash Converters alleging that thousands of Queensland borrowers were forced to pay exorbitant broking fees on payday loans issued by the company. As per the legal firm, some borrowers were required to pay brokerage fees of more than $200 for organising loans of under $1,000.

Mozo’s money experts advise Australians looking for loans to always compare the personal loan market for a competitive deal.

Personal loan comparisons on Mozo - rates updated daily

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Personal Loan

    Unsecured, Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.45% p.a.to 19.99% p.a.
    5.45% p.a.to 19.99% p.a.based on $30,000
    over 5 years

    Excellent credit score needed to obtain this rate. Enjoy no-fuss personal loans of up to $30,000 with Alex Bank. No hidden early repayment penalties. Terms from 6 months to 5 years. Convenient and fast 100% online approval. Must be over 18 to be eligible. Winner of Mozo's Experts Choice Best New Loan Product award 2021^.

    Go to site
    Details
  • Hot DealA special low rate starting from 5.45% (6.07% comparison rate)
    placeholder
    Mozo Experts Choice 2021
    Low Rate Personal Loan (Fixed, Unsecured)

    Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    5.45% p.a.to 8.48% p.a.
    6.07% p.a.to 8.84% p.a.based on $30,000
    over 5 years

    OurMoneyMarket offer competitive low rates on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

    Go to site
    Details
  • Hot DealMozo Exclusive: A special low rate of 5.44% for a limited time only (T&Cs apply)
    placeholder
    Personal Loan

    Unsecured, Fixed, Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    5.44% p.a.to 7.49% p.a.
    5.44% p.a.to 8.19% p.a.based on $30,000
    over 5 years

    With low rates for borrowers with excellent credit, a quick 1 minute rate estimate and simple online application, there’s a lot to love about this loan! You’ll not only benefit from no exit fees, there are also no early repayment fees. To qualify, simply earn above $25,000 and you’ll be on the way to start spending.

    Go to site
    Details
  • placeholder
    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    6.49% p.a.to 19.95% p.a.
    6.76% p.a.to 20.26% p.a.based on $30,000
    over 5 years

    Low personalised rates, ideal for borrowers with excellent credit. No monthly account fees, no early payout fees, so you can pay off your loan sooner. Borrow between $5,000 and $64,000. Easy online application, receive a response in minutes and approved funds within 24-48 hours!

    Go to site
    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.