Payday lender MoneyMe calls for tougher rules

“Lenders can use automation to help reduce the cost of providing loans. This should be reflected in the cost of the loan to the consumer,” he said.

“Our view is that SACCs are not the appropriate product for consumers whose only income or up to 50 percent of income comes from Centrelink payments. [also] encourage the regulator to cap all fees and charges at 50 percent of the original loan amount, compared to 100 percent currently. “

According to the review’s proposals, consumer rental companies such as Radio Rentals and FlexiRent from FlexiGroup could face the same interest rate caps as payday lenders.

The Treasury report said interest rates ranged up to over 800 percent on consumer leases, and customers were paying on average about double the retail price of leased property.

Mr Howes said leasing companies would face the same caps as payday lenders.

The report said it saw no reason why payday loan cost caps should not be placed on leases.

If the current medium-term loan limit of 48% per annum were applied to consumer leases, the final amount paid would average between 1.26 and 1.89 times the retail price, according to the report’s estimates.

As Thorn Group moved away from payday lending, Lincoln’s Yin said caps on rental costs seemed likely.

“The Radio Rentals business is the backbone of [Thorn Group] operations and therefore the possibility of increased compliance and the introduction of caps are likely to impact profits and see recent low prices persist. “

In a submission made before the Treasury’s last report, Thorn Group said there was no justification for a cap on consumer rental costs..

It argues that its customers receive additional benefits that are included in the total price, which is on average approximately 2.6 times the retail price of the leased goods.

These included free delivery and maintenance of the leased goods.

He also rejected the review panel’s and ASIC’s contention that his clients were mostly low-income. He said his clientele is also made up “equally of consumers who have access to major sources of finance and include landlords and tenants.”

The review panel is due to deliver its final recommendations to the government in February.

About Brandon A. Hood

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