A significant achievement in 2007 was the completion of our Progress Loans pilot. This program was developed in partnership with the Brotherhood of St Laurence and provides loans to people on low incomes who otherwise have difficulty accessing credit from mainstream providers. It is now one of the most successful programs of its kind in Australia.
ANZ commissioned Australia's first research into the issue of financial exclusion in 2004. The findings revealed that many Australians struggle to access appropriate low-cost, fair and safe financial services from mainstream providers and around 6% of adults have minimal access to financial services.
These people are often forced to rely on predatory lenders for emergency finance. They include loan sharks, pay day lenders and pawnbrokers who charge very high interest rates, and in some cases, use threatening collection methods.
In response, ANZ and the Brotherhood of St Laurence launched Progress Loans in May 2006 to provide people on low incomes with access to loans of between $500 and $3,000 to pay for household goods and services, self-improvement, medical and car expenses.
Since it commenced, 209 people have benefited from Progress Loans in Victoria. The majority of loans were provided to women. The average loan size is $1,722 and the repayment performance of Progress Loans customers currently exceeds that of mainstream personal loan customers.
Some customers also have the opportunity to participate in ANZ's MoneyMinded and Saver Plus financial literacy programs. Here they can learn about saving and the 'mechanics' of loans such as signing a contract, the structure of a personal loan and making repayments.
Consistent with evaluations of Saver Plus and MoneyMinded, feedback from participants in the Progress Loans pilot program shows the real benefit is more than simply access to money. The loans help to increase their confidence, their sense of inclusion in society and their own ability to improve their circumstances.
One customer, Kevin, used his Progress Loan to buy a fridge while also building a repayment history with a major bank.
'You can't imagine life without a fridge. I suppose an esky would have been the next best thing. The loan was just a godsend. Knowing you've got a fridge, you can stock up on specials,' said Kevin.
'It was a really good sense of achievement. When I finished, ANZ sent me a letter thanking me. It's usually us against the banks. I found this a pleasant relationship. I guess my credit rating's pretty good now.'
Another customer was able to repair his car which was essential to gaining employment and a mother used Progress Loans to purchase a car to give her disabled child the opportunity to access appropriate health care on a regular basis.
ANZ and the Brotherhood will continue to monitor and enhance Progress Loans over the next 12 months, refining aspects to improve its commercial sustainability and ensure a positive customer experience. This will include a comprehensive evaluation and an assessment of the social impact of the program. The goal remains to grow the Progress Loans program and make it available in all states and territories across Australia.
| PROGRESS LOANS (MAY 2006 - SEPTEMBER 2007) | |
|---|---|
| Number of loans approved | 209 |
| Number of loans drawn | 179 |
| Number of applications | 301 |
| % of approvals | 69% |
| Number of defaults | 0 |
| % men versus women | 29% vs 71% |
