ASIC has today put forward a submission to the Independent Review of the Small Amount Credit laws.
ASIC’s submission to the review notes that the current rules that apply to small amount loans, also known as payday loans, are a significant improvement over the previous State-based regimes. However, ASIC has identified a number of potential improvements that are worthy of consideration.
To inform ASIC's submission, a voluntary survey was sent to credit licensees who potentially provide small amount loans. Lenders were asked to provide information for the 2014-15 financial year on matters such as the number of applications received and the number of loans approved.
The data received indicates that the industry provided loans of $831 million last financial year, with the average loan size being $568. Over 1.4 million small amount loans were entered into, with the average length of the loan being well short of the 12 months allowed at just 50 days.
ASIC’s submission also drew on its recent review of industry compliance with the small amount lending provisions with our findings published earlier this year in Report 426 Payday lenders and the small amount lending provisions (REP 426).
Download a copy of ASIC’s submission
Background
Eighty-two responses to the survey were provided, including all listed entities as well as a range of large internet-based loan providers, franchised operations and individual small licensees.
ASIC payday lending outcomes include:
Responsible lending requirements
- Money 3 (refer: 15-168MR)
- The Cash Store and Assistive Finance Australia (refer: 15-032MR)
- Abaz (refer: 14-313MR)
Avoidance models/unlicensed conduct
- Fast Easy Loans (refer: 14-328MR)
- Cash Loan Money Centres and Sunshine Loans (refer: 14-278MR)
- PAID International (formerly First Stop Money) (refer: 14-272MR)
- Teleloans and Finance & Loans Direct (refer: 14-150MR)
- Cash Stop Financial Services (refer: 14-035MR)
- Fast Access Finance (refer: 13-205MR)
- Cashpal (refer: 12-127MR)
Misleading advertising
- PAID International (refer 14-065MR)
- Cash in a hurry (refer: 13-284MR)
- Fair Loans (refer: 13-190MR)
- Nimble (refer: 13-112MR)
- Fair Finance (refer: 13-088MR)
- Cash Today (refer: 12-197MR)
- Money3 (refer: 12-136MR)
Editor's note 1:
On 28 January 2016 ASIC made a second submission to the Independent Review of the Small Amount Credit laws in response to the review's interim report.
Download a copy of ASIC's second submission
Editor's note 2:
On 19 April 2016, the Government released the review's Final Report for consultation. ASIC has now provided its submission to this consultation.