Claire Tacon, assistant financial counselling director at the Consumer Action Law Centre in Victoria, said the volume of calls it received in the first half of 2024 had increased by 64 per cent. A third of them now related to mortgage arrears, formerly an unusual topic. She said bank repayment figures did not account for borrowers doing “anything to keep the roof over their head” and clients in the most desperate situations were often resorting to pawnbroking.

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“I had a client who was struggling to escape a family violence situation,” she said. “She was going through court, and had to keep moving her kids to different properties to hide from the perpetrator.

“She was surviving by pawning her grandmother’s jewellery and, you know, everything she had that was valuable.”

The client was able to get her possessions back because the pawnbroker was signed up to the ombudsman, the Australian Financial Complaints Authority. Tacon is among those calling for more uniform laws around pawnbroking, amid concerns that recent regulation of buy now, pay later and payday loans may push the most vulnerable consumers back towards what is sometimes called the world’s “second-oldest profession”.

Lucinda O’Brien, a post-doctoral researcher at the University of Melbourne Law School, who has led a survey of the industry, said as a minimum, the federal government should require all pawnbrokers to register with AFCA, so dispute resolution doesn’t have to take place through the courts. Last year, CALC filed a class action against a pawnbroker where customers allegedly could no longer access their goods because the business shut down.

She called for greater data collection to understand “who’s using [pawnbroking], how much they’re borrowing, how much interest they’re paying”. A 2019 survey by the Australian Research Council found those taking out pawn loans were more likely to earn less than $25,000 and to rely on social security than buy now, pay later or payday loan users.

O’Brien said they often paid some of the highest interest rates of any loans (in the case of one Cash Converters loan from a class action in 2016, an effective annual interest rate of 420 per cent), but she warned against pawnbroking being “regulated out of existence” for those without an alternative.

“We need to ask people who are using it, and we need to think carefully about what regulations we put in place so that it doesn’t have unintended consequences that would be harmful to the vulnerable people already using the product,” said O’Brien.

Herron, who charges a monthly interest rate of 25 per cent for a three-month loan, said he didn’t think customers, most of whom were repeat clients, needed more protection, adding he told them about upcoming payments, and gave a week’s extension if they couldn’t find the money. He said he provided an essential line of credit to people who could not get one elsewhere.

“Our interest rates are a lot higher than a credit card but once they max out their credit cards, they come and see us,” he said.

Tacon said for those considering pawning an item to cover bills, there were other options, including the No Interest Loans scheme, Centrelink advances, and grants for energy bills.

“For anyone who is struggling and thinking that, you know, they just need to borrow a bit more money and that’s going to fix their problems, I would urge them to speak to a financial counsellor,” she said.

National Debt Helpline 1800 007 007.