Senator the Hon. Mathias Cormann
Minister for Finance
The Government is improving consumer protections for Australians that borrow small amount loans, also known as 'payday' loans.
Since 1 July 2013 there has been a cap on costs for small amount credit contracts, for loans less than $2,000 cash in hand to the consumer, with a maximum term of 12 months.
Some 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.
This includes removing the ability for lenders to charge additional fees each time a customer requests a further advance on their continuing credit contract.
The Regulation has received broad support across consumer stakeholders and industry participants and follows a public consultation process conducted earlier this year.