The Politics of Payday Lending Regulation in Australia

Monash University Law Review, Vol. 39, No. 2, pp. 412-451, 2013

U of Melbourne Legal Studies Research Paper No. 696

42 Pages Posted: 1 Mar 2014 Last revised: 24 Feb 2015

See all articles by Paul Ali

Paul Ali

University of Melbourne - Law School

Cosima Hay McRae

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: December 31, 2013

Abstract

The regulation of payday lending in Australia has recently been reformed. The reforms followed a highly charged and polarised debate between the conflicting interests of consumer and welfare advocates — who argued for increased protection for payday loan borrowers — and the payday loan industry. The debate followed research findings of the adverse consequences of payday lending for low income and financially vulnerable borrowers. We analyse the political dynamic that unfolded and show how the protections proposed to be afforded to payday loan borrowers were reduced in several key respects. Our research highlights several concerns. First, key changes to the original proposals do not take account of the recommendations of consumer and welfare advocates and are more consistent with the views of the payday loan industry. Second, the increased complexity of the final form of the regulation of payday lending creates potential for regulatory avoidance and poses problems for enforcement. Third, policies to reduce reliance on payday loans have not been implemented. The result is new regulation of payday loans that may not achieve the key aim of protecting the most vulnerable borrowers from the harm that can result from these loans.

Suggested Citation

Ali, Paul and McRae, Cosima Hay and Ramsay, Ian, The Politics of Payday Lending Regulation in Australia (December 31, 2013). Monash University Law Review, Vol. 39, No. 2, pp. 412-451, 2013 ; U of Melbourne Legal Studies Research Paper No. 696. Available at SSRN: https://ssrn.com/abstract=2402514

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

Cosima Hay McRae

University of Melbourne - Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

HOME PAGE: http://www.unimelb.edu.au

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
258
Abstract Views
1,274
rank
123,324
PlumX Metrics