• Document: Payday lenders and the new small amount lending provisions
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REPORT 426 Payday lenders and the new small amount lending provisions March 2015 About this report This report sets out the findings of a review of the payday lending industry and its response to the additional protections for vulnerable consumers contained in the small amount lending provisions of the Consumer Credit Legislation Amendment (Enhancements) Act 2012 (Enhancements Act). REPORT 426: Payday lenders and the new small amount lending provisions About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Disclaimer This report does not constitute legal advice. We encourage you to seek your own professional advice to find out how the National Credit Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this report are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. © Australian Securities and Investments Commission March 2015 Page 2 REPORT 426: Payday lenders and the new small amount lending provisions Contents Executive summary .......................................................................................4 Small amount lending provisions .............................................................4 ASIC’s previous work on payday lending ................................................6 What we did as part of this report ............................................................7 What we found .........................................................................................7 Further work ...........................................................................................17 A Background ..........................................................................................18 What is a ‘small amount loan’? ..............................................................18 Legislation and guidance .......................................................................19 Purpose of our review ............................................................................21 Methodology ..........................................................................................21 B Key findings .........................................................................................24 The payday lending industry in 2014 .....................................................24 90-day account statements....................................................................26 Protected earnings amount....................................................................26 Cap on costs ..........................................................................................27 Warning statement ........................

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