Lending on the Edge

In Australia, pawnbrokers are largely exempt from national consumer credit legislation. They are instead governed by state legislation, which affords very limited protection to consumers. This study outlines the current regulation of pawn lending and presents a qualitative profile of consumers who use pawn loans. In the absence of reliable industry data, it draws on case law, media reports, law reform submissions, previous qualitative studies and an online survey of consumers, conducted by the authors. The study argues that the light regulation of pawn lending creates a high risk of consumer harm and regulatory arbitrage by unscrupulous providers. It proposes law reforms and policy measures to address these risks and to provide more effective protection to consumers.