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Published online by Cambridge University Press: 01 January 2025
Payday loans are small-amount, short-term, unsecured, high-cost credit contracts provided by non-mainstream credit providers. Payday loans are usually taken out to help the consumer pay for essential items, such as food, rent, electricity, petrol, broken-down appliances or car registration or repairs. These consumers take out payday loans because they cannot — or believe that they cannot — obtain a loan from a mainstream credit provider such as a bank. In recent years there has been a protracted debate in Australia — and in several overseas jurisdictions — about how to regulate the industry. Recent amendments to the National Consumer Credit Protection Act 2009 (Cth) — referred to in this article as the 2013 reforms — are designed to better protect payday loan consumers. While the 2013 reforms provide substantially improved protection for payday loan consumers, further changes to the law may be warranted. This article raises several law reform issues which should be considered as part of the 2015 review into small amount credit contracts, including whether the caps on the cost of credit are set at the right level, whether the required content and presentation of the consumer warnings needs to be altered, whether more needs to be done to protect consumers who are particularly disadvantaged or vulnerable and whether a general anti-avoidance provision should be included in the credit legislation.
1 A non-mainstream credit provider is a credit provider other than an authorised deposit-taking institution (ADI). An ADI is a body corporate in relation to which an authority under s 9(3) of the Banking Act 1959 (Cth) is in force, such as a bank, building society or credit union: National Consumer Credit Protection Act 2009 (Cth) s 5.
2 The Department of Treasury has referred to payday lenders as providers of high-cost, small amount, short-term loans, that is, loans for amounts up to 2000 and for periods of up to two years: Department of Treasury, Australian Government, Strategies for reducing reliance on high-cost, short-term, small amount lending (Discussion Paper, April 2012). The Regulation Impact Statement used the term payday loan to refer more narrowly to loans of less than 1000 for periods of less than three months: Department of Treasury, Australian Government, The Regulation of Short Term, Small Amount Finance (Regulation Impact Statement, June 2011) 8. Regarding the use of the expression payday loan in Australia and the United States, see Howell, Nicola, Interest Rate Caps and Price Regulation in Consumer Credit in Malbon, Justin and Nottage, Luke (eds), Consumer Law & Policy in Australia & New Zealand (The Federation Press, 2013) 311Google Scholar, footnote 2.
3 Zac Gillam and the Consumer Action Law Centre, Payday Loans: Helping Hand or Quicksand? Examining the Growth of High-Cost Short-Term Lending in Australia, 2002-2010 (Research Report, September 2010). Note that this report studied payday loans with a term of 8 weeks or less.
4 Marcus Banks et al, Caught Short Exploring the Role of Small, Short-Term Loans in the Lives of Australians (Final Report, August 2012).
5 The results produced by the various studies and reports are not identical this may be due to variations in research methodology. For example, the report by Zac Gillam and the Consumer Action Law Centre relied, in part, on responses to an on-line survey of 448 borrowers. It is possible that these respondents did not reflect the overall payday loan population, which may explain why that report suggested that the average income level of payday loan consumers was higher than that suggested by some other reports. On this point see, Banks et al, above n 4, 23.
6 Department of Treasury, The Regulation of Short-Term, Small Amount Finance', above n 2, 15.
7 Gillam and the Consumer Action Law Centre, above n 3, 53.
8 Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 15. See also, Banks et al, above, n 4, 16.
9 Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 1718. See also, Banks et al, above n 4, 34.
10 Gillam and the Consumer Action Law Centre, above n 3, 814.
11 Gillam and the Consumer Action Law Centre, above n 3, 6875; Marcus Banks et al, above n 4, 3741. See also Gregory Marston and Lynda Shevellar, The Experience of Using Fringe Lenders in Queensland: A Pilot Study (Research Report, Social Policy Unit, School of Social Work and Human Services, The University of Queensland, July 2010) 369; Financial Counselling Australia, What Financial Counsellors Say About Payday Lending (Report, October 2011) 5.
12 That is, if they cannot, or believe that they cannot, obtain finance from a mainstream credit provider.
13 For a discussion of the issue of vulnerability and financial exclusion, see, eg, Wilson, Therese, Vulnerable and Disadvantaged Consumers in Malbon, Justin and Nottage, Luke (eds), Consumer Law & Policy in Australia & New Zealand (The Federation Press, 2013) 288Google Scholar, especially 28896. See also Brotherhood of St Laurence, The Stewardship Principle: How Australia's Financial Industry Can Better Serve the Needs of Low-Income and Vulnerable Consumers A Submission to the Commonwealth Government's Financial System Inquiry (Submission, March 2014) 515.
14 Other repayment methods are sometimes utilised in Australia, such as an authorised deduction from the consumer's wages or salary. In the United Kingdom, repayments are often made using a continuous payment authority (CPA), which is similar (although not identical) to a direct debit authorisation.
15 Schedule 3 came into effect on 1 March 2013. Schedule 4 came into effect on 1 July 2013. These amendments relate to small amount credit contracts and medium amount credit contracts'. These concepts will be explained later in this article.
16 See, eg, Financial Conduct Authority (UK), Detailed Proposals for the FCA Regime for Consumer Credit (Consultation Paper 13/10, October 2013), 5280.
17 The regulation of payday lending has also been debated in various other jurisdictions. For example, in the United States, payday lending is largely regulated at state level. The regulatory approach differs markedly from state to state. For an overview of the regulation of payday loans in the United States, see, eg, Colin Morgan-Cross and Marieka Klawitter, Effects of State Payday Loan Caps and Regulation (University of Washington, 2 December 2011). Refer also to the following website which seeks to compare the regulation of payday lending across the different states: <http://www.paydayloaninfo.org>.
18 That is, the review of the law relating to small amount credit contracts which must be undertaken as soon as practicable after 1 July 2015: National Consumer Credit Protection Act 2009 (Cth) s 335A.
19 It should be emphasised that these are general trends only. There is some evidence to suggest that many consumers who are middle-class and employed take out payday loans, especially from internet payday loan providers: Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (December 2011) 6871.
20 At least three-quarters of payday loan consumers are between 18 and 44 years of age: Gillam and the Consumer Action Law Centre, above n 3, 45; Marcus Banks et al, above n 4, 22.
21 It should not, however, be assumed that this is the case for all payday loan consumers. Indeed, it has been asserted that many low-income earners possess strong financial management capabilities, but these are constrained by … lack of access to suitable products and unscrupulous practices by certain credit providers': Good Shepherd Youth & Family Service, Submission No 23 to Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, 14 October 2011, 5.
22 Marcus Banks et al, above n 4, 23.
23 Consumer Credit Legal Centre (NSW), Submission to the Financial System Inquiry, Parliament of Australia (April 2014) 22; Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 1718.
24 Note that in Victoria, for example, car registration fees are currently payable on a yearly or six-monthly basis. It may be useful for people on low incomes, who may find budgeting for large bills difficult, to have the option of paying their car registration by monthly instalment.
25 Some research suggests that the level of consumer understanding of the overall cost of payday loans is low. See, eg, Gillam and the Consumer Action Law Centre, above n 3, 646; Parliamentary Joint Committee on Corporations and Financial Services, above n 19, 75. In contrast, other research suggests that many consumers have some understanding of the costs involved, but tend to make purchasing decisions on the basis of convenience rather than cost. See, eg, Personal Finance Research Centre University of Bristol, The Impact on Business and Consumers of a Cap on the Total Cost of Credit (Research Report, 2013) 203, 312.
26 Many alternatives to payday loans may be available, depending on the circumstances. In practice, many (but not all) consumers would not qualify for a bank loan because of their poor credit rating or low level of income. Even where a bank loan may be possible, the consumer may mistakenly believe that the application would be rejected or may consider that the process of applying for a loan, and waiting for an answer from the bank, would take too long if the need for funds was urgent. Other alternatives to payday loans exist. They will often be less expensive for the consumer, but may be more difficult and time-consuming to pursue. For example, a consumer who needs money to pay for their electricity bill may seek assistance from their electricity provider. On the other hand, if the funds are needed to replace a major household item it may be possible to apply for a loan under the no interest loan schemes (NILS).
27 National Credit Code ss 7275. (The National Credit Code is set out in Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth)).
28 National Credit Code ss 7677.
29 See, generally, McGill, Denise, Corones, Stephen and Howell, Nicola, Regulating the Cost of Small Loans: Overdue or Overkill? (2012) 30(3) Company and Securities Law Journal 149, 164165.Google Scholar
30 See, eg, Gillam and the Consumer Action Law Centre, above n 3, 119120.
31 There is, however, little reliable data available about the actual level of payday loan default in Australia. It is likely that the level of default will vary considerably according to the lending criteria applied by different payday lenders and the charges they levy on consumers: Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 27.
32 Gillam and the Consumer Action Law Centre, above n 3, 67; Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 19.
33 Productivity Commission, Australian Government, Review of Australia's Consumer Policy Framework (Inquiry Report No 45, 30 April 2008) 3756.
34 Ibid 377.
35 Ibid 378, 385.
36 See, eg, Gillam and the Consumer Action Law Centre, above n 3, 2645; Department of Treasury, The Regulation of Short Term, Small Amount Finance', above n 2, 16; Marston and Shevellar, above, n 11, 514. The need for improved consumer education about the alternatives to payday loans has been acknowledged in many reports; see, eg, Consumer Affairs Victoria, Small Amount Lending Inquiry (Report, 2008) 224.
37 It should not be thought that perplexing consumer behaviour with respect to product costs is confined to payday loan consumers. Many people are very cost-sensitive in relation to low-cost items and will, for example, buy a dozen cage eggs rather than free range eggs to save a couple of dollars. However, many people are less cost-sensitive in relation to high-cost items and will, for example, incur high interest charges through not paying off their credit card in full each month even if they have the capacity to do so. In this regard, ASIC has reported that over 500,000 Australians carry more than 5,000 in credit card debt. It is often middle income earners, managers and degree qualified people who are most likely to have such a debt: Australian Securities and Investments Commission, Smart People Not So Smart with Their Money (Media Release 14-041, 12 March 2014).
38 Donald P Morgan and Michael R Strain, Payday Holiday: How Households Fare after Payday Credit Bans (Staff Report No 309, Federal Reserve Bank of New York, November 2007).
39 Consumer Credit Legal Centre (NSW), above n 23, 21.
40 Financial Counselling Australia, above n 11, 89.
41 Other negative consequences may flow from payday loans. For example, taking out a payday loan may reduce the prospects of the consumer being able to obtain a loan from a mainstream credit provider in the future.
42 Lynne Casey and Rachel Pui-Tak Liang, Stress and Wellbeing in Australia Survey (Report, Australian Psychological Society, October 2014), 1617.
43 Financial Conduct Authority, above n 16, 637.
44 The limitations of disclosure as a mechanism to protect consumers of financial products and services have been widely discussed in recent years. See, eg, Australian Securities and Investments Commission, Financial System Inquiry interim report: Submission by the Australian Securities and Investments Commission (Submission, August 2014) 312; Consumer Action Law Centre, Financial Systems Inquiry Terms of Reference (Submission, 31 March 2014) 256.
45 Changing the law is not the only way for standards of conduct in the payday loan industry to be improved. It may be for individual payday lenders to voluntarily adopt higher standards of conduct. The impetus to do this could be driven by stakeholder pressure (eg shareholders of listed payday lenders or banks who provide finance to payday lenders). This possibility was alluded to by Mann and Hawkins, albeit in the context of the United States legal system. They argue that large publicly traded companies … must fear the adverse effects on their market capitalization that are likely to ensue if they engage in behaviour that is portrayed as unpalatable or illegal in the mass media': Mann, Ronald J and Hawkins, Jim, Just Until Payday (2007) 54 University of California Los Angeles Law Review 855, 907.Google Scholar See also Butler, Carmen M and Park, Niloufar A, Mayday Payday: Can Corporate Social Responsibility Save Payday Lenders? (2006) 3 Rutgers Journal of Law and Public Policy 119.Google Scholar It may also be possible, at least in theory, for an industry-wide voluntary code of practice to be developed for the payday lending industry: Consumer Affairs Victoria, Small Amount Lending Inquiry (Report, 2008) 345; Damon Gibbons, Neha Malhotra and Richard Bulmore, Payday Lending in the UK: A Review of the Debate and Policy Options (Report, Centre for Responsible Credit, October 2010) 45; 267.
46 Before this time, consumer credit was regulated primarily at State or Territory level, notably under the Uniform Consumer Credit Code (UCCC).
47 Refer to the definition of credit contract': National Consumer Credit Protection Act 2009 (Cth) s 5.
48 Ibid ss 29(1), (3).
49 Ibid s 6. A person provides a credit service if they provide credit assistance to a consumer or if they act as an intermediary: Ibid s 7. The term credit assistance includes suggesting that a consumer apply for a particular credit contract with a particular credit provider, or assisting the consumer to apply for a particular credit contract with a particular credit provider: Ibid s 8.
50 The circumstances in which a licence may be granted are set out in National Consumer Credit Protection Act 2009 (Cth) pt 2-2 div 3.
51 Ibid s 47(1)(h).
52 Ibid s 47(1)(i).
53 Ibid ss 12830.
54 Ibid s 131(2).
55 Ibid s 133(1).
56 ASIC has, however, provided guidance on the responsible lending obligations, including the requirement that the loan not be unsuitable: Australian Securities and Investments Commission, Credit Licensing: Responsible Lending Conduct, Regulatory Guide 209, 5 November 2014.
57 National Consumer Credit Protection Act 2009 (Cth) ss 1789.
58 For details of some recent enforcement action in relation to the responsible lending provisions, see, Australian Securities and Investments Commission, ASIC Enforcement Outcomes: July to December 2014, Report 421, January 2015, 1619.
59 National Consumer Credit Protection Act 2009 (Cth) pt 2-2 div 6.
60 Ibid s 133(6). It is interesting to compare these penalties with those imposed on financial service licensees who provide personal advice to retail clients. In particular, note that no criminal penalties can be imposed on a financial services licensee in respect of a breach of the obligation to act in the best interests of the client: Corporations Act 2001 (Cth) pt 7.7A div 2.
61 National Consumer Credit Protection Act 2009 (Cth) s 133(1).
62 National Consumer Credit Protection Regulations 2010 (Cth) reg 39.
63 The National Credit Code is essentially a re-enactment of the superseded UCCC.
64 National Credit Code s 16(1)(a). See also National Consumer Credit Protection Regulations 2010 (Cth) regs 713.
65 National Credit Code s 16(1)(b). See also National Consumer Credit Protection Regulations 2010 (Cth) reg 70.
66 National Credit Code ss 725.
67 Ibid s 76.
68 Ibid s 78.
69 Ibid ss 111, 118.
70 The expression credit facility is defined broadly in the regulations: Australian Securities and Investments Commission Regulations 2001 (Cth) reg 2B.
71 Australian Securities and Investments Commission Act 2001 (Cth) ss 12CA12CC.
72 Ibid s 12DA.
73 Ibid s 12DB.
74 Ibid s 12BF.
75 Ibid s 12GXA.
76 Ibid s 12GF.
77 Australian Securities and Investments Commission, Small Amount Lender Pays 30,600 Penalty for Misleading Online Advertisements (Media Release 14-065, 2 April 2014).
78 Consumer Credit (Victoria) Act 1995 (Vic) ss 3940.
79 Credit (Commonwealth Powers) Act 2010 (NSW) sch 3; Consumer Credit (Queensland) Act 1994 (Qld) s 14; Consumer Credit (Queensland) Special Provisions Regulation 2008 (Qld) reg 3; Consumer Credit Act 1995 (ACT) s 10; Consumer Credit Regulations 1996 (ACT) reg 5.
80 National Consumer Credit Protection Act 2009 (Cth) s 5(1).
81 National Credit Code ss 31A(1)(a), (2). Note, however, that no establishment fee can be charged if the purpose of the new contract is to refinance another small amount credit contract: National Credit Code s 31A(1A).
82 Ibid ss 31A(1)(b), (3). A monthly fee is payable on a monthly basis starting on the day the credit contract is entered into. So, for example, the credit contract can impose a 4% monthly fee even if the term of the credit contract is only three weeks.
83 Ibid s 31A(1)(c).
84 Ibid s 31A(1)(d).
85 Australian Securities and Investments Commission, ASIC Class Order, CO 13/818, 28 June 2013.
86 National Credit Code s 204(1).
87 Ibid s 39B.
88 Common law principles may further restrict the amount which creditors can recover in the event of default: Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 69 [5.49].
89 National Credit Code s 23A(1).
90 Ibid s 23A(2)(a).
91 Ibid s 24(1)(a).
92 National Consumer Credit Protection Regulations 2010 (Cth) reg 39.
93 National Consumer Credit Protection Act 2009 (Cth) pt 2-2 div 6.
94 National Credit Code s 23A(2)(b).
95 Consumer Credit Legislation Amendment (Enhancements) Bill 2011 (Cth) sch 4 item 12.
96 For a discussion of the political environment in which the legislation was debated, see Ali, Paul, McRae, Cosima and Ramsay, Ian, The Politics of Payday Lending Regulation in Australia (2013) 39 Monash University Law Review 411.Google Scholar
97 National Credit Code s 32A(1).
98 Ibid s 32B(2).
99 Ibid s 204(1).
100 Ibid s 32A(1). The 48% cap does not, however, apply to credit provided by an authorised deposit-taking institution (ADI): ss 32A(4)(a), 32AA(1)(b).
101 National Consumer Credit Protection Act 2009 (Cth) s 133CA.
102 Ibid s 5(1).
103 Supplementary Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 13 [1.49].
104 National Consumer Credit Protection Act 2009 (Cth) s 130(1A). For an explanation of these amendments, see Supplementary Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 15 [1.63]. See also Explanatory Memorandum, National Consumer Credit Protection Bill 2009 (Cth) 105 [3.139 Example 3.6].
105 Australian Securities and Investments Commission, above n 56, 31 [209.80].
106 Note that the ANZ bank has suggested that for those whose sole income is government benefits, or those who are on very low incomes or receive no income, responsible lending laws will almost always preclude them from being able to access credit from mainstream lenders': ANZ, Submission to the Department of Treasury, Strategies for Reducing Reliance on High-Cost, Short-Term, Small Amount Lending, June 2012, 1.
107 For an interesting discussion of this issue, see, Howell, above n 2, 329335.
108 The review is required by National Consumer Credit Protection Act 2009 (Cth) s 335A. On the face of that section it is not clear whether the review is intended to consider the issue of caps on costs of credit. However, the explanatory memorandum suggests that the review is intended to cover caps: Supplementary Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 17 [1.76].
109 In this regard, note that Cash Converters has stated that they believe that the overall impact … [of the 2013 reforms] … will be positive … [The] rates cap gives us the clarity and comparability, supporting a sustainable business model that will see earnings increase … (emphasis added): Cash Converters International Limited, Annual Report 2013', 17 October 2013, 25.
110 Financial Conduct Authority (UK), Detailed Rules for the FCA Regime for Consumer Credit (Policy Statement 14/3, February 2014), 589.
111 For an analysis of break-even points, see National Australia Bank, Do You Really Want to Hurt Me? Exploring the Costs of Fringe Lending A Report on the NAB Small Loans Pilot (Report, March 2010). The 2015 review may also wish to consider the impact of the 2013 reforms on the payday lending industry. For example, if there has been a substantial increase in the number of payday lenders, or the profitability of existing payday lending businesses, this may indicate that the caps have been set too high.
112 Sajid Javid and George Osborne, Government to Cap Payday Loan Costs (25 November 2013) GOV.UK <https://www.gov.uk/government/news/government-to-cap-payday-loan-costs>. High-cost short-term credit is, in essence, an unsecured loan where the term of the loan is no more than 12 months and the annual cost rate of the loan would equal or exceed 100%: Financial Conduct Authority (UK), above, n 110, 446.
113 Financial Services (Banking Reform) Act 2013 (UK) c 33, s 131.
114 Financial Conduct Authority (UK), above n 110, 589.
115 Office of Fair Trading (UK), Review of High-Cost Credit (Final Report, June 2010) 910.
116 Consumer Credit Legal Centre (NSW), above n 23, 24.
117 See, eg, Money3, Submission to the Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, 13 October 2011, 5.
118 See National Consumer Credit Protection Act 2009 (Cth) s 133CB; National Consumer Credit Protection Regulations 2010 (Cth) regs 28XXA, 28XXB, 28XXD.
119 Explanatory Statement, National Consumer Credit Protection Amendment Regulation 2012 (No 4) (Cth).
120 National Consumer Credit Protection Regulations 2010 (Cth) reg 28XXA.
121 Ali, McRae and Ramsay, above n 96, 4434.
122 See, eg, Consumer Action Law Centre, What Warning? Observations about Mandated Warnings on Payday Lender Websites (Report, August 2013).
123 Financial Conduct Authority (UK), above n 110, 56.
124 As required, for example, in Ontario: Payday Loans Act, SO 2008, c 9, s 14. See also Duggan, Anthony, Consumer Credit Redux (2010) 60 University of Toronto Law Journal 687, 703.CrossRefGoogle Scholar
125 National Consumer Credit Protection Act 2009 (Cth) ss 118(3A), 131(3A), 133(3A).
126 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, sch 3 item 4.
127 National Credit Code s 39C; National Consumer Credit Protection Regulations 2010 (Cth) reg 79C. Note that, for any credit contract, a direct debit default notice must be given to the consumer where a direct debit default occurs: National Credit Code s 87. This notice informs the consumer that a direct debt payment has been unsuccessful, tells the consumer to contact the credit provider to arrange to make the required loan repayment, and refers the consumer to the possibility of a hardship variation application. If this notice is given to the consumer, there is nothing in the law to prevent the credit provider continuing to attempt to obtain repayment by relying on the direct debit request. By way of contrast, in the United Kingdom, the FCA has adopted a more robust approach and decided that, following two unsuccessful attempts to utilise a continuous payment authority (CPA) to obtain repayment of an amount owing in relation to high cost short term credit, a firm must not seek to continue to rely on that CPA: Financial Conduct Authority (UK), above n 110, 4955.
128 National Consumer Credit Protection Regulations 2010 (Cth) reg 28S.
129 National Consumer Credit Protection Act 2009 (Cth) s 130(1A).
130 In this regard, ASIC has stated, rather unhelpfully, that we would expect credit providers and credit assistance providers to make reasonable inquiries and verifications about whether the consumer is currently, or has been within the preceding 90-day period, a debtor under any other small amount credit contracts, and whether the consumer is in default in payment of an amount under those contracts': Australian Securities and Investments Commission, above n 56, 23 [209.56].
131 National Consumer Credit Protection Act 2009 (Cth) s 335A(1)(b). See, also, Australian Securities and Investments Commission, Review of the Effectiveness of an Online Database for Small Amount Lenders (Consultation Paper 198, 25 January 2013); Centre for Responsible Credit (UK), Tackling the High Cost Credit Problem: The Importance of Real-Time Regulatory Databases (Report, September 2013).
132 Regarding the need for some form of reporting obligation to be imposed on payday lenders, see, eg, National Australia Bank, Submission to the Financial System Inquiry, March 2014, 20.
133 See, eg, Ali, McRae and Ramsay, above n 96, 4445.
134 Financial Conduct Authority (UK), above n 110, 48.
135 Money3 has suggested that rollovers should be permitted only if 75% of the loan has been repaid: Money3, Submission to the Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, 13 October 2011, 5.
136 The review could also consider whether it would be desirable for ASIC to have the power to control the circumstances in which repeat borrowing is permitted, or whether such matters should be determined solely by legislation. In this regard, it is arguable that ASIC already has a power to set standards in this area. This is because ASIC has the power to issue class order modifications of the responsible lending provisions: National Consumer Credit Protection Act 2009 (Cth) s 163. However, using a class order modification power to impose new obligations on the payday lending industry may not prove to be universally popular and may not withstand legal or Parliamentary scrutiny. In this regard, it has been argued that wherever possible … [modifications] … which would affect a large or open-ended class of people, and would do so for a lengthy or indefinite period, should be made by formal amendment of the Act': Bottomley, Stephen, The Notional Legislator: The Australian Securities and Investment Commission's Role as a Law-Maker (2011) 39 Federal Law Review 1, 29.CrossRefGoogle Scholar
137 Avoidance schemes are also unfair for those industry participants who comply with the law, and thereby incur the additional costs of such compliance.
138 See, eg, National Financial Services Federation, Submission to the Financial System Inquiry, 1 April 2014.
139 National Consumer Credit Protection Act 2009 (Cth) s 5.
140 Australian Securities and Investments Commission, ASIC commences legal action against Fast Access Finance (Media Release 13-205, 7 August 2013).
141 National Consumer Credit Protection Regulations 2010 (Cth) reg 28XXF.
142 Financial Counselling Australia, above n 11, 10.
143 Ironically, the purpose of the DVD is often to provide money management guidance for the consumer.
144 National Credit Code s 39A. See also Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 678 [5.415.42]. Note that this provision applies in respect of small amount credit contracts only it does not, for example, apply in relation to medium amount credit contracts.
145 National Credit Code s 31B. See also Supplementary Explanatory Memorandum, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) 22 [1.951.96]. Again, note that this provision applies in respect of small amount credit contracts only.
146 National Consumer Credit Protection Regulations 2010 (Cth) reg 79AE. Note that this regulation does not apply in relation to medium amount credit contracts.
147 National Credit Code s 143(1).
148 ASIC v The Cash Store Pty Ltd (in liquidation) [2014] FCA 926 (26 August 2014).
149 The Bill has not yet been introduced into Parliament. The attitude of the current Government to the Bill is unknown. For a discussion of the proposed anti-avoidance measures in the Bill, see, Consumer Credit Legal Centre (NSW), Submission to the Department of Treasury, Submission in Relation to the National Consumer Credit Protection Amendment (Credit Reform Phase 2) Bill 2012, March 2012) 25.
150 See, eg, ANZ, Adult Financial Literacy in Australia (Report, December 2011); Australian Securities and Investments Commission, Financial Literacy and Behavioural Change (Report 230, March 2011); Australian Securities and Investments Commission, National Financial Literacy Strategy 201417 (Reports 403, 404, 2014).