Consumer groups back crackdown on payday loans

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Consumer groups are calling on Parliament to pass changes to payday loans that will prevent vulnerable people from going deep into debt.

Payday lenders offer consumers quick cash, but typically charge very high fees and interest.

The Consumer Action Law Center and CHOICE will appear before a House committee on Friday, calling on the Senate to support the reforms.

The bill, which has already passed the lower house, includes a 10% cap on the amount of a person’s income that can be absorbed by loan repayments.

The previous ceiling was 20% and applied only to people receiving social security benefits.

Deputy Treasurer Stephen Jones said the reforms were long overdue, with the former coalition government pledging to regulate products in 2016.

However, the changes failed to take off.

“We want to strike a balance between protecting vulnerable consumers and providing credit in a safe environment,” Jones told AAP.

“We clean up what we believe to be unsafe or unreasonable practices.”

Tania Clarke of Consumer Action said that in the years since the reforms were launched, hundreds of customers had experienced financial hardship due to unregulated credit products.

“The fees and charges are astronomical,” Ms. Clarke said.

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