Consumer Action and the Consumer Credit Legal Centre NSW have made a joint submission to Treasury on exposure draft consumer credit regulations affecting payday lenders.

In summary, we are supportive of the proposed regulations, and the efforts by the Federal Government to close loopholes in credit legislation that payday lenders exploit to avoid consumer protections, including licensing requirements and caps on costs that payday lenders are permitted to charge. However, we submit that there are various refinements to the regulations needed, to ensure that the lenders are not able to circumvent consumer protections—these refinements are detailed in this submission.

More broadly, we submit that the Government should consider including a general anti-avoidance provision in the national credit laws. There has been a long history of avoidance strategies employed by fringe lenders across the credit industry. The very fact that avoidance strategies have been exploited by lenders in the payday lending sector, so soon after much more comprehensive regulation of that sector, suggests that the regulatory regime needs a more flexible anti-avoidance provision to discourage avoidance and enable the regulator to take action before widespread consumer detriment occurs.

A full copy of our submission is available by clicking: Consumer Credit Regulations.

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