Gillard Government doubles the maximum interest rate vulnerable consumers can be slugged

THE Gillard government has doubled the maximum interest rate 500,000 vulnerable consumers can be slugged - exactly what payday lenders had asked it to do.

Instead of cracking down on the $800 million-a-year sector, Financial Services Minister Bill Shorten has caved in to lobbying by Cash Converters and other payday lenders.

Mr Shorten had proposed capping charges to a 10 per cent up-front fee plus 2 per cent a month. But a spokeswoman told The Daily Telegraph yesterday: "We are (now) thinking of 20 per cent up front with a 4 per cent per month fee."

Those are caps Cash Converters put to a parliamentary committee that examined Mr Shorten's original plan.

Cash Converters' apparent victory came after it employed a lobbying firm chaired by former federal Labor treasurer John Dawkins.

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http://www.dailytelegraph.com.au/news/gillard-government-doubles-the-maximum-interest-rate-vulnerable-consumers-can-be-slugged/story-e6freuy9-1226281090334