New measures that protect consumers who borrow from high-cost lenders and mobile traders came into effect on 1 June 2020.
The measures are aimed at preventing predatory lending practices that trap vulnerable consumers in debt and include:
- capping the interest and fees on high-cost loans to 0.8 per cent per day
- requiring mobile traders to comply with responsible lending protections in the Credit Contracts and Consumer Finance Act.
These changes are part of wider improvements the Government is making to consumer credit law. Other changes relating to high-cost credit that came into effect on 1 May 2020 include limiting the total cost of credit to 100 per cent of the loan principal, banning compound interest, and limiting default fees to $30.
The Government is aiming to have further consumer credit reforms, including new affordability regulations and new requirements for lenders to meet fit and proper person thresholds, in place from 1 October 2021.