Loan change lets lenders take less
The rules on payday loan are being tightened, because the Federal Government says providers are going over the cap on costs.
Minister for Finance Mathias Cormann says he is “improving consumer protections for Australians that borrow small amount loans”, also known as 'payday' loans.
Since July 2013 there has been a cap on costs for small amount credit contracts; loans less than $2,000 cash in hand to the consumer, with a maximum term of 12 months.
Mr Cormann says credit providers have been attempting to exceed the cap on costs, as well as the licensing and responsible lending obligations under the credit laws.
“To ensure that vulnerable consumers are not charged excessive fees, we have made improvements through the National Consumer Credit Protection Amendment (Small Amount Credit Contracts) Regulation 2014,” Cormann announced this week.
“This includes removing the ability for lenders to charge additional fees each time a customer requests a further advance on their continuing credit contract.”
There has reportedly been support already from consumer stakeholders and industry participants.
The moves follow a public consultation process conducted earlier this year.