The federal government will clamp down on excessive fees charged by loan sharks, after receiving the green light from parliament.
New laws passed by the Senate today are aimed at protecting people who use pay-day lending and other similar credit services.
For loans under $2000, the establishment fee is limited to 20 per cent of the loan amount. The legislation will also cap the fees for loans between $2000 and $5000 to $400.
Labor senator Lisa Singh said the bill was designed to stop predatory trading practices.
"No longer will lenders be able to charge exorbitant fees of one-third or one-half of the total amount of credit that is actually provided," she told the Senate.
"No longer will people who borrow $300 for a week be hit with $100 for a seven-day loan."
The new laws will also prohibit loans of 15 days or less and require lenders not to provide credit to consumers seeking seek a third loan in three months, under responsible lending rules.
The coalition supported the legislation after working with the government on some changes.
Opposition assistant treasury spokesman Mathias Cormann said the original bill had assumed only vulnerable people used such services.
"The suggestion that somehow this industry only preys on the weak and vulnerable was really not borne out by any evidence," he told the Senate.
But Greens senator Sarah Hanson-Young said the final version was so weak it could have been written by the loan sharks.
"What we see is a bill that has been watered down so much because of the agreement with the coalition," she told the senate.
"This government's bill now basically does nothing to offer any real protection for consumers that they desperately need."
Greens amendments to cap the number of loans available to consumers to four per year and create a registration system were defeated.
The Consumer Credit Legislation Amendment (Enhancements) Bill 2012 now awaits Royal Assent.
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