Financial Services Minister Bill Shorten has eased up on payday lenders with revisions to a bill regulating the industry.
Shorten has released draft amendments to his Credit Enhancements Bill, lifting the cap on small amount credit contracts from 10% to 20% of the amount of credit advanced. Shorten has also sought to change the previously proposed cap on monthly fees from 2% to 4%.
"Payday lending can be high risk for vulnerable or low-income consumers. People often borrow money from payday lenders in order to meet short-term commitments like rent and groceries. The interest charged on the loan is often so exorbitant it only worsens the financial position of the consumer in the long-term, who may need to take out further loans in order to pay off the original loan and the interest," he said.
Shorten said the draft amendments to the Credit Enhancements Bill came following "significant review" through Parliamentary inquiries and consultation with industry stakeholders.
"The draft amendments I am releasing today refine the operation of the Bill, and improve its effectiveness," he said.
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