Issue Date:  -  Monday, 25 March 2002

Government Reins in Pay Day Lenders

The Consumer Credit Code will soon require all Short Term Credit Lenders (Pay Day Lenders) to be licensed or they will be out of business, Consumer Protection Commissioner Patrick Walker announced today.

“Pay day loans are generally small amounts of money advanced for a fee until the consumers next pay day, when the loan and the fee is recovered via a direct debit authority from their bank. People who use these services are often those least able to afford unreasonable charges, so we are pleased to be bringing this sector of the credit industry under regulation”, Mr. Walker said.

From June 1st 2002 short term credit lending will be covered by the Consumer Credit Code and this will require Pay Day Lenders to be licensed as credit providers. The Department of Consumer and Employment Protection is in the process of contacting Pay Day Lenders advising of the requirements. It is urging them to seek independent legal advice prior to applying for their licences, which must be done by the 10th of April in order to be considered. Operating without a licence will be illegal after 1st June 2002.

“This is a good opportunity for those working within this industry, as it introduces a path towards legitimacy and fair play in an environment where previously consumers have been disadvantaged by varying fees and inconsistent arrangements”, the Commissioner said.

Previously, loans of less than sixty-two days have been exempt from the requirements of the Consumer Credit Code. The changes will bring loans of less than sixty-two days and more than $50 under the Code for the first time and offer consumers protection under the Consumer Credit (Western Australia) Act 1996.

Licence application kits with all the necessary forms and information are available from:

Karen Marshall
Licensing Officer, Department of Consumer & Employment Protection
Telephone: (08) 9282 0833
Fax: (08) 9282 0863
Email: kmarshall@mft.wa.gov.au