Small amount credit contract laws are currently under review. Here’s some of what we told the reviewers:
- Cap the cost of small amount (up to $2,000) and medium amount (up to $5,000) loans at 48% per annum, inclusive of all fees and finance charges, the same level that is able to be charged for loans above $5,000
- Increase funding for ASIC to take compliance and enforcement action, and strengthen ASIC’s licensing regime
- Require lenders to provide more information to the regulator, including the number of loans advanced, the size of loan books, and the level of defaults
- Prohibit lenders providing loans where the applicant has an existing loan, or where they have had more than 2 loans in a 90 day period
- Limit the number of loans a borrower can have in a twelve month period to two
- Require all lenders to disclose an annual percentage rate, including prominently in advertising
- Limit to 10% the amount of fortnightly income that can be directed to loan repayments for all Centrelink recipients and other low-income borrowers
- Establish a national database of loans to facilitate enforcement with restrictions on repeat borrowing
- Establish a general anti-avoidance provision to enable the regulator to better attack business models and products that avoid the law
- Abolish the distinction between consumer leases and other loans, so that all credit arrangements are subject to a comprehensive 48% cost cap
Want to know more?
Call our policy experts on 03 9670 5088 or email campaigns(at)consumeraction.org.au for more information about the impact of payday loans.