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Investigation report no. BI-170Summary

File no. BI-170

Broadcaster Australian Broadcasting Corporation

Station ABC Radio National

Type of service National broadcasting – radio

Name of program The World Today

Date of broadcast 16 October 2015

Relevant code Standards 2.1, 2.2 and 4.1 of the ABC Code of Practice 2011 (revised in 2014)

Date finalised 2 May 2016

Decision No breach of standard 2.1 [accuracy]

No breach of standard 2.2 [materially mislead]

No breach of standard 4.1 [due impartiality]

OpeningIn February 2016, the Australian Communications and Media Authority (the ACMA) commenced an investigation under section 151 of the Broadcasting Services Act 1992 into a segment of The World Today. The segment was broadcast on ABC Radio National by the Australian Broadcasting Corporation (ABC) on 16 October 2016 at approximately 12:45 pm.

The ACMA received a complaint alleging that a comment by the reporter was inaccurate and the segment was biased as it failed to provide a balancing viewpoint.

The ACMA has investigated the ABC’s compliance against standards 2.1, 2.2 and 4.1 of the ABC Code of Practice 2011 (revised in 2014) (the Code).

The programThe World Today is a current affairs program on the ABC’s News Radio channel, described as:

a comprehensive current affairs program which backgrounds, analyses, interprets and encourages debate on events and issues of interest and importance to all Australians.1

The segment concerned research by a not-for-profit micro lender which found an 80 per cent increase in the use of payday loans, also known as small amount credit contracts (SACC). In an interview, the CEO of the micro lender described borrowers as ‘financially stressed’ and unable to meet their financial commitments. The segment also referred to the Australian Government’s review of SACC and consumer lease laws.

A transcript of the report is at Attachment A.

Assessment and submissionsWhen assessing content, the ACMA considers the meaning conveyed by the material, including the natural, ordinary meaning of the language, context, tenor, tone, and any inferences that may be drawn. This is assessed according to the understanding of an ‘ordinary reasonable’ listener.

Australian courts have considered an ‘ordinary reasonable’ listener to be:

A person of fair average intelligence, who is neither perverse, nor morbid or suspicious of mind, nor avid for scandal. That person does not live in an ivory tower, but can and does read between the lines in the light of that person’s general knowledge and experience of worldly affairs.2

Once the ACMA has ascertained the meaning of the material that was broadcast, it then assesses compliance with the Code.

The investigation takes into account the complaint (at Attachment B) and submissions from the ABC (at Attachment C). Other sources are identified below.

1 http://www.abc.net.au/worldtoday/, accessed on 14 March 2016.2 Amalgamated Television Services Pty Limited v Marsden (1998) 43 NSWLR 158 at pp 164–167.

ACMA Investigation report—The World Today broadcast by ABC Radio National on 16 October 2016 2 of 18

http://www.abc.net.au/worldtoday/

Issue 1: Accuracy

Relevant Code provisions

Standards 2.1 and 2.2:

2.1 Make reasonable efforts to ensure that material facts are accurate and presented in context.

2.2 Do not present factual content in a way that will materially mislead the audience.In some cases, this may require appropriate labels or other explanatory information.

The Code requires that standards are interpreted and applied in accordance with the applicable principles. In the case of accuracy, the relevant principles include:

[…]

The ABC requires that reasonable efforts must be made to ensure accuracy in all fact-based content. The ABC gauges those efforts by reference to:

the type, subject and nature of the content;

the likely audience expectations of the content;

the likely impact of reliance by the audience on the accuracy of the content; and

the circumstances in which the content was made and presented.

The ABC accuracy standard applies to assertions of fact, not to expressions of opinion. An opinion, being a value judgement or conclusion, cannot be found to be accurate or inaccurate in the way facts can. The accuracy standard requires that opinions be conveyed accurately, in the sense that quotes should be accurate and any editing should not distort the meaning of the opinion expressed.

The efforts reasonably required to ensure accuracy will depend on the circumstances. Sources with relevant expertise may be relied on more heavily than those without. Eyewitness testimony usually carries more weight than second-hand accounts.

[…]

The ABC should make reasonable efforts, appropriate in the context, to signal to audiences gradations in accuracy, for example, by querying interviewees, qualifying bald assertions, supplementing the partly right and correcting the plainly wrong.

FindingThe ABC did not breach standards 2.1 and 2.2 of the Code.

ReasonsIn assessing compliance with standard 2.1 of the Code, the ACMA asks:

> Was the particular content complained about factual in character?

> Did it convey a material fact or facts in the context of the relevant segment?


> If so, were those facts accurate?

> If a material fact was not accurate (or its accuracy cannot be determined), did the ABC make reasonable efforts to ensure that the material fact was accurate and presented in context?

In assessing compliance with standard 2.2 of the Code, the ACMA asks:

> Was the particular content complained about factual in character?

> If so, was that factual content presented in a way that would materially mislead (i.e. in a significant respect) the audience?

The considerations the ACMA generally uses in assessing whether broadcast material is factual in character are set out at Attachment D.

The complainant submitted to the ABC:

In the ABC News radio segment: […] presenter Lucy Carter stated, "Consumers ... can face annual interest rates of more than 300 per cent." This statement is false, and is misleading and deceptive. Small amount credit contracts, called 'payday' loans in the article, are prohibited by law from charging interest. Their allowable charges cannot be annualised into an interest rate - annual rate calculations require a compounding factor which cannot happen to these loans. […]

The complainant submitted to the ACMA:

The ABC is […] factually incorrect with respect to the level of charges. Borrowers may not, […] “face a host of allowable fees that can create a potential accumulation of charges within the range of 300%”. That level of charge is specifically prohibited by law [… section 39B(1) of the National Credit Code.

To make it clear, the legislation allows the following for small amount credit contracts:

- Unless in default, the maximum amount chargeable is 68% of the amount borrowed; or

- If in default, the maximum amount ever chargeable is 100% of the amount borrowed (excepting enforcement expenses).

The maximum allowed is nowhere near the claimed “300%”, or even “within the range” – by accumulation or otherwise.

The ABC’s responses to the initial complaint included the following:

ABC News management has explained that the reporter met the editorial requirement for reasonable efforts by confirming the accuracy of her figures against dedicated research conducted by the Australian Securities and Investments Commission (ASIC), Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre.

[…] the program’s research confirmed that while it is the case that credit providers are not allowed to charge annual interest on the loan, there are a host of allowable fees that can create a potential accumulation of charges within the range of 300%.

The ABC submitted to the ACMA that, based on research by the reporter, the industry itself uses the term ‘interest’ in relation to SACC loans, and also refers to an ‘effective interest rate’.

The ABC also advised that the term ‘annual interest rate’ was clarified on its online transcript. The editor’s note of 19 February 2016 on the transcript appearing on the ABC website is:


Credit providers are not allowed to charge annual interest on the loans. However, borrowers may face a host of allowable fees that can create a potential accumulation of charges within the range of 300 per cent.3

Standard 2.1

Was the particular content complained about factual in character?

The relevant statement by the reporter is:

Consumers who don't repay these loans on time or roll over loans can face annual interest rates of more than 300 per cent.

This statement is factual in character, as it is specific, unequivocal and capable of independent verification.

Did it convey a material fact or facts in the context of the relevant segment?

The context of the segment was the release of research demonstrating an increase in use of SACC loans, the consequences for borrowers of not repaying them when they become due and recommendations being made to the Australian Government’s review of SACC and consumer lease laws.

In this context, the factual assertion about the potential liability for an unpaid SACC loan was a material fact.

Was the material fact accurate?

The ABC has submitted (see Attachment C) that its research confirmed that there are a number of allowable fees which can create a potential accumulation of charges within the range of 300%. These include establishment fees, account keeping fees in addition to undefined enforcement fees and government charges. It set out an example of fees payable on a $100 loan that was not paid after 12 months, concluding that the ‘effective rate of interest is easily within the range of 300%’.

However, acknowledging the complainant’s concern about the term ‘annual interest rates’ the editor’s note was made.

The complainant has disputed the figures and calculation of total fees and charges used by the ABC in its example of an outstanding loan of $100 (see Attachment B). This calculation was not broadcast.

Section 39B of the National Consumer Protection Act 2009 (the NCPA) provides:

39B Limit on amount that may be recovered if there is default under a small amount credit contract

(1) If there is a default in payment under a small amount credit contract, the maximum amount that may be recovered (whether by repayments under the contract or otherwise) by the credit provider in relation to the contract must not exceed an amount that is twice the adjusted credit amount in relation to the contract.

(2) Any provision of the small amount credit contract that confers a greater right is void to the extent that it does so. If an amount is in fact recovered in excess of this limitation, it may be recovered back.

(3) This section does not apply to enforcement expenses.

3 http://www.abc.net.au/worldtoday/content/2015/s4333156.htm accessed 22 April 2016


http://www.abc.net.au/worldtoday/content/2015/s4333156.htm

The ACMA accepts that the term ‘annual interest rate’ was not accurate. It would have been preferable if the ABC had characterised the $300 figure referred to in the broadcast as ‘allowable fees and enforcement expenses’ on unpaid SACC loans rather than as an ‘annual interest rate’.

The ACMA has no information before it to calculate enforcement expenses, so it is not in a position to determine the accuracy of the quantum of $300 quoted in the segment to illustrate total fees and charges on an outstanding loan that was not repaid after 12 months.

If a material fact was not accurate (or its accuracy cannot be determined), did the ABC make reasonable efforts to ensure that the material fact was accurate and presented in context?

The ABC has submitted that it took reasonable efforts to ensure the accuracy of the relevant statement.

As noted in the ABC’s submissions above, the industry has used the term ‘interest rate’ and ‘effective interest rate’ to describe annual percentage rates on payday loans. Further, the ABC checked the accuracy of its figures against dedicated research conducted by ASIC, Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre.

The focus of the segment was not the breakdown of amounts payable on particular payday loans. It concerned research that revealed an increase in these loans of 80 per cent in 10 years, the ‘financially stressed’ nature of borrowers, and the Government review into SACC loans. The segment also featured a real life example of a borrower with multiple loans and referred to the modus operandi of lenders resulting in a cycle of debt and to the factors resulting in higher numbers of financially stressed borrowers. These facts were not disputed.

In this context, it is likely that the ordinary reasonable viewer would have understood that the reference to 300 per cent was to the amount, including fees and expenses, that would be payable on a loan that was unpaid after 12 months.

The ACMA accepts that the ABC made reasonable efforts to ensure that the material facts concerning SACC loans and the Australian Government review were accurate and presented in context.

Standard 2.2

Was the particular content complained about factual in character?

As discussed above, the content complained about was factual. The figure of $300 was incorrectly described as an ‘annual interest rate’ but reasonable efforts had been taken to ensure the accuracy of the figure. Other facts were not disputed and there was no contention that the researcher was misquoted or that the outcomes of his research was misrepresented.

If so, was that factual content presented in a way that would materially mislead (i.e. in a significant respect) the audience?

Given the subject and focus of the segment, and the research relied on by the ABC in its preparation, discussed above, the ACMA considers that the factual material was not presented in a way that would have materially misled the audience.

Accordingly, the ABC did not breach standards 2.1 and 2.2 of the Code.


Issue 2: Impartiality and diversity of perspectives

Relevant Standards

Standard 4.1

Gather and present news and information with due impartiality

The Code requires that this standard is interpreted and applied in accordance with the relevant principles, which include:

Judgements about whether impartiality was achieved in any given circumstances can vary among individuals according to their personal and subjective view of any given matter of contention. Acknowledging this fact of life does not change the ABC’s obligation to apply its impartiality standard as objectively as possible. In doing so, the ABC is guided by these hallmarks of impartiality:

a balance that follows the weight of evidence;

fair treatment;

open-mindedness; and

opportunities over time for principal relevant perspectives on matters of contention to be expressed.

[...]

Impartiality does not require that every perspective receives equal time, nor that every facet of every argument is presented.

Assessing the impartiality due in given circumstances requires consideration in context of all relevant factors including:

the type, subject and nature of the content;

the circumstances in which the content is made and presented;

the likely audience expectations of the content;

the degree to which the matter to which the content relates is contentious;

the range of principal relevant perspectives on the matter of contention; and

the timeframe within which it would be appropriate for the ABC to provide opportunities for the principal relevant perspectives to be expressed, having regard to the public importance of the matter of contention and the extent to which it is the subject of current debate.

FindingThe ABC did not breach standard 4.1 of the Code.

ReasonsThe relevant provision requires the ABC to ‘gather and present news and information with due impartiality’. Inclusion of the word ‘due’ indicates an element of flexibility depending on the particular context.


Compliance in any given circumstance will depend on the themes in the program, any editorial comment, the overall presentation of the segment and the circumstances in which the program was prepared and broadcast.

A program that presents a perspective that is opposed by a particular person or group is not inherently partial.

Along with contextual factors, the ACMA’s assessment of compliance will include considerations of the hallmarks of impartiality: a balance that follows the weight of evidence; fair treatment; open mindedness; and opportunities over time for principal relevant perspectives on matters of contention to be expressed.

The complaint is that the segment did not present or seek to present a counter perspective to the views expressed, and that the segment gave air time to a pro-consumer spokesperson who made negative comments about the SACC industry.

The ABC submitted that the interviewee represented a principal relevant perspective on the specific issue being reported and that impartiality does not require that an opposing view be presented nor that every perspective receives equal time. Further, there is no editorial requirement to present a ‘balancing’ viewpoint within the context of the specific report.

Contextual factors

As noted at issue 1 above, the context of the segment included the release of research by a not-for-profit micro lender which shows a large increase in the use of payday loans in Australia, to the ‘financially stressed’. This was illustrated with an example of a borrower who had taken out multiple loans. It also dealt with recommendations being made by the researcher to the Australian Government’s review of SACC and consumer lease laws.

A balance that follows the weight of evidence

As a matter under review by the Government the segment concerned a matter of public interest. The segment explored this issue from the perspective of research conducted into payday loan usage in Australia, illustrated by examples, and the recommendations of the researcher to the review.

Given the topic and focus, it was not unreasonable that the segment concentrated on the views of one of the authors of the research.

The Principles relating to standard 4 note that Impartiality does not require that every perspective receives equal time, nor that every facet of every argument is presented.

The ACMA accepts the ABC’s submission that:

[…] impartial treatment of an issue or topic does not mean always opposing one view with another. Impartiality does not require that every perspective receives equal time, or that every facet of every issue is presented. As the focus of this report was the research which had been published outlining the increase in Australians using payday lenders, one of the authors of that research was interviewed to explain their study.

Fair treatment

The segment explored the researchers’ views on the newsworthy release of the research conducted into the payday loan sector. There is no assertion that the segment distorted or misrepresented his views.


It was made clear in the segment that the number of loans that could be taken on by borrowers, poor budget management and unemployment contributed to issues faced by them.

Open-mindedness

The tone and language of the presenter and reporter were neutral, measured and did not convey any apparent enmity against, or support for, the payday loan sector.

The segment focused on the research that had been released and the recommendations that would be put to the Australian Government review.

Opportunities over time for principal relevant perspectives on matters of contention to be expressed

This hallmark provides for opportunities for principal relevant perspectives on matters of contention to be given over time, and across the ABC’s services, rather than within a specific broadcast.

The ABC submitted that on the subject of payday loans, it has provided varied coverage from multiple perspectives, as demonstrated by the broadcasts noted at Attachment C.

Given the subject and the brevity of the segment, audiences would not have expected it to contain exhaustive reporting of all perspectives and issues related to the payday loan industry.

The ACMA is satisfied that the ABC has provided opportunities over time for relevant principal perspectives to be expressed on issues relating to payday loans product use in Australia. In the context of the segment the hallmarks of impartiality were met.

Accordingly, the ABC did not breach standard 4.1 of the Code.


Attachment ATranscript of The World Today, broadcast on ABC Radio National on 16 October 2016

KIM LANDERS: New research has revealed that the number of Australians using payday lending services has increased by 80 per cent in 10 years.

The research was done by a not-for-profit micro-lender.

It also showed that everyone who borrowed money through a payday lender could be classified as "financially stressed".

The Federal Government is currently reviewing payday lenders and consumer lease companies, as Lucy Carter reports.

LUCY CARTER: As the CEO of not-for-profit lender Good Shepherd Microfinance, Adam Mooney has seen lives ruined by payday lending services.

ADAM MOONEY: I can think of one particular client, a woman in Geelong who was on a disability support pension who did earn an income but needed a fridge and was unable to afford that to pay outright and her only option, to be able to keep her medicine in the fridge for diabetes was to go to a payday lender.

LUCY CARTER: The woman, who can't be identified, had been rejected by banks for a loan and didn't qualify for a credit card. She ended up with five separate payday loans that financially crippled her.

ADAM MOONEY: She had an energy bill, a telco bill, eventually had to bring forward that money to pay the payday loan and also the energy bill, missed the rent, that was the third month in a row that she missed the rent and was evicted, causing this very slippery slope to substance abuse and alcohol abuse and triggering underlying mental health issues.

LUCY CARTER: Research commissioned by Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre, has found that close to one third of all Australian households are now classified as 'financially stressed' or unable to meet their financial commitments. Overspending and poor budget management is the main issue, however unemployment has become an increasingly significant factor.

ADAM MOONEY: This is a sign of the times really, we’re seeing a cost of housing rise, cost of food and transport rise, and incomes especially people on low incomes on Centrelink benefits simply just aren’t keeping up.

LUCY CARTER: Over the past decade, the number of households using payday lending has gone up by 80 per cent.

Consumers who don't repay these loans on time or roll over loans can face annual interest rates of more than 300 per cent.


ADAM MOONEY: One of the modus operandi of this sector is very much to entangle the client in a perpetual cycle of debt. Once you pay that loan back, there is no way that they're ever going to let you go without several phone calls wishing you a happy birthday, sending you a Christmas card, and saying would you like to come to a barbecue at our store - trying to create this sense of entanglement and that there is perpetual credit on offer.

LUCY CARTER: In August the Federal Government announced a review into these types of lenders as well as consumer lease companies like Radio Rentals and Flexigroup.

Good Shepherd Microfinance CEO Adam Mooney says his organisation's submission to this review is making simple recommendations.

ADAM MOONEY: The main recommendations that we're making to the Government is to include consumer leases in the price-capping regime of the Credit Act so that people aren't paying four, five, six times the value of an item through a consumer lease, and even not owning it at the end of it.

We're also wanting to establish a database or a credit bureau which positively reports the loans that are outstanding, or the loans that have been repaid by people in this small amounts sector. This will enable us to overcome multiple loans and bring down the overall cost, I'm sure, when we see this rippling through.

KIM LANDERS: The CEO of Good Shepherd Microfinance Adam Mooney ending that report from Lucy Carter.


Attachment BComplaint’s submissions

Complaint to the ABC dated 16 November 2016

[…]

In the ABC News radio segment: "Australians using payday lenders increased 80 per cent in two years" (aired 16/10/15), presenter Lucy Carter stated, "Consumer ... can face annual interest rates of more than 300 per cent." This statement is false, and is misleading and deceptive. Small amount credit contracts, called 'payday' loans in the article, are prohibited by law from charging interest. Their allowable charges cannot be annualised into an interest rate - annual rate calculations require a compounding factor which cannot happen to these loans. We request a retraction with an explanation of the reason for retraction to be published in formats and at times commensurate with the original article, and a commitment to refrain from further such comments.

Complaint to the ABC dated 23 December 2015

[…] We note the two relevant parts of the editorial standards for accuracy. However, from the information you have provided it does not appear to us that either part has been complied with sufficiently.

Before considering the reasoning itself, the 'dedicated research' against which the figures were confirmed is itself concerning, as:

- We know of no ASIC information which supports either the figure claimed or the rationale by which such a figure may be determined; and

- Good Shepherd Microfinance, Consumer Action Law Centre and Financial Rights Legal Centre are all anti- small amount lending industry proponents. As such, any information they propose is biased against the industry and, in our opinion, blatantly incorrect. It is apparent from both the content of the segment and your reply that neither a balancing viewpoint from an industry representative nor information from an impartial commentator was sought.

As for the reasoning provided:

1. Your response states "...can easily create an effective interest rate within the range...". However, the term "effective interest rate" was not used in the news article - it used the term "annual interest rates", which are different.

In any event, an effective interest requires the ability to compound during its calculation period - something that small amount credit contracts are specifically prohibited from doing. If you cannot compound an amount by law, you cannot conscionably apply a compounding formula to it and expect to obtain a reasonable outcome.

It should also be noted that "effective interest rate" is not a term which is used in the relevant legislation.

2. Your $100 loan example is wrong, and if it were a real loan it would be unlawful.


The example states a "default fee" of $200, premised on the reasoning that "if you do fall into default (inclusive of any repayments made under the contract, including default fees) is twice (200%) the amount loaned" [sic].

This rationale is incorrect. The NCCP Act provides (at sub-section 39B(1)):

"If there is a default in payment under a small amount credit contract, the maximum amount that may be recovered (whether by repayments under the contract or otherwise) by the credit provider in relation to the contract must not exceed an amount that is twice the adjusted credit amount in relation to the contract."

Accordingly, in your example the maximum "default fee" that may be charged is $32.00 (as the establishment fee, account keeping fee and default fee must not be more than $100 - equal to the amount of capital). Charging $200 would be a clear breach of the law.

The total which may lawfully be charged is therefore $200 (or 100%) - far short of the claimed 300%. However, even this figure is not necessarily correct, as the next point demonstrates.

3. Even if your figures were correct, it is incorrect to present interest rate calculations in the manner used. Your calculations factor in a default charge. Interest rate calculations which incorporate fees and charges only incorporate ascertainable amounts - being charges which it is certain that the consumer must pay. Subsection 166(2) of the National Credit Code provides, for example:

"For the purposes of calculating the relevant comparison rate, credit fees or charges are not ascertainable and need not be included in the calculation if their imposition or amount is dependent on events that may or may not happen (unless a regulation under this section otherwise provides)." (no such regulation providing otherwise exists)

Default fees are not ascertainable as they rely on 'events that may or may not happen', being an act of default by the consumer. Every standard interest rate for common loan products (other than small amount credit contracts) are calculated on this basis.

Accordingly, it is misleading and incorrect to factor such fees into any indicative interest rate calculation; it is certainly not something that is done for any other published interest rate against which comparison may be made.

Factoring in the allowable and ascertainable charges under a small amount credit contract: even if it were relevant to create an annualised percentage rate, it would be a maximum of 68% - a far cry from the 300% erroneously represented.

Complaint to the ACMA dated 2 February 2016

In the ABC News Radio segment “Australians using payday lenders increased 80 per cent in two years", the ABC journalist makes the following statement concerning small amount loans: "Consumers who don't repay these loans on time or roll over loans can face annual interest rates of more than 300 per cent." This statement is factually wrong. Small amount loans are prohibited from charging interest under federal law. The fees they can charge cannot be turned into an annualised rate because they cannot compound, and an interest rate calculation requires that to be done.

This complaint has been further mishandled by the ABC by failing to respond within a reasonable time frame. Then, when a response was given, it attempted to justify the story by reliance on spurious reasoning. Further, our response to this attempted justification has been ignored.

Submission to the ACMA dated 22 February 2016


I received the attached email from the ABC on Friday afternoon, 19 February. The ABC’s response is not acceptable.

A: Accuracy about the level of charges

The ABC is still factually incorrect with respect to the level of charges. Borrowers may not, as the ABC’s […] puts it, “face a host of allowable fees that can create a potential accumulation of charges within the range of 300%”. That level of charge is specifically prohibited by law, as I stated in my email of 23 December 2015 by reference to section 39B(1) of the National Credit Code.

To make it clear, the legislation allows the following for small amount credit contracts:

- Unless in default, the maximum amount chargeable is 68% of the amount borrowed; or

- If in default, the maximum amount ever chargeable is 100% of the amount borrowed (excepting enforcement expenses).

The maximum allowed is nowhere near the claimed “300%”, or even “within the range” – by accumulation or otherwise.

The ABC appear to be trying to twist their meaning to refrain from having to change the ultimate figure. So, now, not only is the figure wrong but it appears they are attempting to portray charges in way which is not commonly accepted or understood as the manner in which finance charges are presented; which is confusing to the average reader.

Rather than clarifying the matter in their response, it appears they have perpetuated the misrepresentation and made it more obscure.

B: Impartiality

On the issue of balance, I don’t agree with the ABC’s characterisation of the research nor their reasoning for the manner of presentation. While it may be that impartiality does not require that “every perspective receives equal time, or that every facet of every issue is presented”, I note that in the article there was:

(a) No other perspective presented at all; and

(b) No acknowledgment that any other perspective was sought.

While some of the report may have been about the research, the ABC also referred to the Federal Government’s review of the laws and gave air time to a pro-consumer spokesperson who made negative comments about our industry.

I note that in assessing the impartiality due, factors such as contentiousness and timeframe must be given consideration. The ABC was already aware of the currency of the government review – as they referred to it twice in the article; including in the opening statement. The information portrayed in the article also makes it reasonably clear that the information may have been of a contentious nature, and I reiterate that the article shows the ABC apparently made no effort to seek any form of diverse perspective on the issues.


Attachment CABC’s submissions

ABC response to the complainant dated 23 December 2016

Thank you for your email regarding The World Today report Australians using payday lenders increased 80 per cent in two years: research.

Your concerns have been investigated by Audience and Consumer Affairs, a unit which is separate to and independent of program making areas within the ABC. We have reviewed the broadcast and assessed it against the ABC's editorial standards for accuracy.

The program has explained that it relied on the dedicated research into this issue by ASIC, Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre.

We note the following relevant editorial standards for accuracy -


2.2 Do not present factual content in a way that will materially mislead the audience. In some cases, this may require appropriate labels or other explanatory information.

We note your statement - presenter Lucy Carter stated, "Consumer ... can face annual interest rates of more than 300 per cent." This statement is false, and is misleading and deceptive. Small amount credit contracts, called 'payday' loans in the article, are prohibited by law from charging interest. Their allowable charges cannot be annualised into an interest rate - annual rate calculations require a compounding factor which cannot happen to these loans.

ABC News management has explained that the reporter met the editorial requirement for reasonable efforts by confirming the accuracy of her figures against dedicated research conducted by ASIC, Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre. In regard to payday loans, the program's research confirmed that while it is the case that credit providers are not allowed to charge interest on the loan, there are a host of allowable fees that can easily create an effective interest rate within the range of 300%.

For example, a one-off establishment fee of 20% of the amount loaned, a monthly account keeping fee of 4% of the amount loaned, a government fee or charge and enforcement expenses if you fail to pay back the loan. If a customer defaults by failing to pay back the loan by the due date, they will usually be charged a default fee until they repay the outstanding amount in full. The maximum you can be charged if you do fall into default (inclusive of any repayments made under the contract, including default fees) is twice (200%) the amount loaned.

So, for example, if you fail to pay a $100 loan due within a month, after 12 months you owe; Capital - $100

+establishment fee - $20

+account keeping fee - $48

+default fee - $200

= $368


+ undefined enforcement expenses and government charges

So the effective rate of interest is easily within the range of 300%

We are satisfied that there is nothing materially misleading about the report's reference to this figure as the "interest" a borrower would have to pay on the loan and it is in keeping with the accuracy standards in section 2 of the ABC Code of Practice.

ABC response to the complainant dated 19 February 2016:

As explained in our previous response, the program’s research confirmed that while it is the case that credit providers are not allowed to charge annual interest on the loan, there are a host of allowable fees that can create a potential accumulation of charges within the range of 300%. However, The World Today has acknowledged your concern regarding the reporter’s reference to “annual interest rates of more than 300 per cent”. The program has posted an editor’s note to the online transcript of the report on its website, clarifying that while credit providers are not allowed to charge annual interest on the loans, borrowers may face a host of allowable fees that can create a potential accumulation of charges within the range of 300%.

Audience and Consumer Affairs apologise that this matter was not resolved in our initial response to you.

Audience and Consumer Affairs is satisfied that Good Shepherd Microfinance CEO Adam Mooney represented principal relevant perspectives on the specific issue being reported, which was the research his organisation co- authored with the Consumer Action Law Centre and the Financial Rights Legal Centre. We cannot agree that because the research conducted by those organisations has a consumer focus and their study is critical of the payday loan industry, that they are therefore biased.

With regard to your concerns on balance, while recognizing this is an element of impartiality, impartial treatment of an issue or topic does not mean always opposing one view with another. Impartiality does not require that every perspective receives equal time, or that every facet of every issue is presented. As the focus of this report was the research which had been published outlining the increase in Australians using payday lenders, one of the authors of that research was interviewed to explain their study. We note the ABC has covered a range of issues surrounding payday lending on a newsworthy basis, over time, in keeping with the editorial requirement for impartiality in section 4 of the ABC Code of Practice. We are satisfied there was no editorial requirement to present a “balancing” viewpoint within the context of this specific report.

Thank you for allowing Audience and Consumer Affairs the opportunity to re-examine your concerns. Please be assured that your further comments are noted.

ABC submission to the ACMA dated 11 March 2016:

[…] comments are provided on compliance with ABC accuracy standards in regard to the statement: “Consumers who don’t repay these loans on time or roll over loans can face annual interest rates of more than 300 per cent.”


As explained to [the complainant], the reporter’s statement was informed by research undertaken by Good Shepherd Microfinance, the Consumer Action Law Centre and the Financial Rights Legal Centre. The statement is supported by advice provided on ASIC’s website


https://www.moneysmart.gov.au/borrowing-and-credit/payday-loans and pay day lender, Perfect Payday which states on its website:

“An APR [Annual Percentage Rates] is calculated by working out the annual amount that you will pay in interest on a given loan.... As a result the APR rate can seem less relevant; $100 paid back at an interest rate of $24 per month would indeed be very expensive (you would in-fact pay back nearly $400 in total), but over the course of a month you would only re-pay $124.” https://www.perfectpayday.com.au/charges/

The ABC is satisfied that the reporter made reasonable efforts to ensure that the material facts are accurate in the story.

With regard to the use of the term ‘interest rate’, the example above from Perfect Payday demonstrates that the industry itself uses the term ‘interest’ in relation to these charges. Another example is ‘Ferratum’ which refers to an “effective interest rate”: https://www.ferratum.com.au/our-charges Notwithstanding this, the ABC accepts that in fact credit providers are not allowed to charge an annual interest on such loans: this has been clarified on the online transcript of this story. The ABC is satisfied that this clarification resolves [the complainant’s] complaint.

On 16 March 2016, the ABC submitted the following list of links to stories about payday lending covered by the ABC over time:

http://www.abc.net.au/news/2015-08-05/payday-lenders-hit-as-westpac-cuts-off-finance/6673692

http://www.abc.net.au/news/2015-08-07/payday-lending-federal-government-announces-review/6680094

http://www.abc.net.au/pm/content/2016/s4410170.htm

http://www.abc.net.au/news/2015-03-30/good2go-loans-investigated-by-asic/6357166

http://www.abc.net.au/4corners/stories/2015/03/30/4205225.htm

http://www.abc.net.au/news/2015-03-31/pay-day-loan-27debt-trap27-rife-in-tasmania2c-community-lend/6360680

http://www.abc.net.au/news/2015-01-11/payday-lender-under-fire-for-utility-bill-assistance-ads/6011350



http://www.abc.net.au/news/2015-03-31/charity-seeing-increasing-demand-from-payday-loan/6360874










http://www.abc.net.au/4corners/stories/2015/03/30/4205225.htm

http://www.abc.net.au/news/2015-03-30/good2go-loans-investigated-by-asic/6357166






https://www.ferratum.com.au/our-charges

https://www.perfectpayday.com.au/charges/

https://www.moneysmart.gov.au/borrowing-and-credit/payday-loans

Attachment DACMA considerations for determining factual content:

> In practice, distinguishing between factual material and other material, such as opinion, can be a matter of fine judgement.

> The ACMA will have regard to all contextual indications (including subject, language, tenor and tone and inferences that may be drawn) in making its assessment.

> The ACMA will first look to the natural and ordinary meaning of the language used.> Factual material will usually be specific, unequivocal and capable of independent

verification. > The use of language such as ‘it seems to me’ or ‘we consider/think/believe’ will tend to

indicate that the content is contestable and presented as an expression of opinion or personal judgement. However, a common sense judgement is required and the form of words introducing the relevant content is not conclusive.

> Statements in the nature of predictions as to future events will rarely be characterised as factual material.

> Statements containing hyperbole will rarely be characterised as factual material.> The identity of the person making a statement (whether as interviewer or interviewee) will

often be relevant but not determinative of whether a statement is factual material. > Where it is clear in the broadcast that an interviewee’s account is subjective and

contestable, and it is not endorsed or corroborated, their allegations will not be considered as factual assertions.

> Where an interviewee’s stance is separately asserted or reinforced by the reporter or presenter, or proof of an allegation is offered so that it becomes the foundation on which a program or a critical element of the program is built, it may be considered a factual assertion.4

> Sources with expertise may be relied on more heavily than those without, in determining whether material is factual, but this will depend on:> whether the statements are merely corroborative of ‘lay’ accounts given by other

interviewees > the qualifications of the expert> whether their statements are described as opinion > whether their statements concern past or future events5 > whether they are simply comments made on another person’s account of events or

a separate assertion about matters within their expertise.

4 See investigation 2712; Channel Seven Adelaide Pty Limited v Australian Communications and Media Authority [2014] FCA 667.

5 See investigations 3066, 2961.


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