2 September 2011

Regulation of short-term, small amount (payday) finance – Regulation Impact Statement – Treasury

On 25 August 2011, the Assistant Treasurer announced measures to increase the level of protection for the provision of short-term, small amount lending. These changes follow on from the issues identified during the course of Phase One of the National Consumer Credit Protection Reforms, and have been addressed as part of Phase Two. Credit providers will be expected to comply with additional obligations, including:

  • the imposition of a cap on costs for loans under $2000 that run for less than two years; 
  • a prohibition on refinancing small amount contracts; and
  • disclosure of the availability of alternative options, including no/low interest loans, Centrelink products and hardship programs with utilities or other credit providers.

The Regulation Impact Statement was prepared by the Treasury and was assessed as adequate by the Office of Best Practice Regulation.

1 comment to Regulation of short-term, small amount (payday) finance – Regulation Impact Statement – Treasury

  • Phillip Smiles

    Putting aside any assessment of the adequacy of the RIS, it is significant to note that the content only reflects a consideration of information available to Treasury, following the release of the Green Paper in the second half of 2010. Since that time, Treasury has been the recipient of results from major research undertaken by Smiles Turner for the National Financial Services Federation in December 2010, as a response to a Treasury Discussion Paper.
    Further, on at least three occasions in 2011, as part of a response by the Financiers’ Association of Australia/Industry/Smiles Turner Delegation to Discussion Papers published by Treasury, the Delegation has provided Treasury with considerable information and contemporary research results. Additional substantial information was provided during a face to face meeting and a teleconference between the Delegation and Treasury earlier this year. None of this information appears to have been considered and the RIS paper, although dated June 2011, but not posted until September 2, is a document that was plainly completed prior to the end of last year.
    We regard the possibility of draft legislation, released in late August 2011, being developed on information sources no more current than November 2010, as most unsatisfactory. As someone who has been intimately involved with industry communications with Treasury and has found all relevant Treasury officers to be impressively courteous, well informed and professional, I am deeply troubled that no mention of preparation or existence of this RIS has been made at any time in the consultation process this year, given the intensity and frequency of such consultation, since January.
    It would not be unreasonable to request and receive an explanation as to why this RIS was clouded in secrecy until as recently as 2nd September.

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