Unscrupulous payday lenders are coming under the scrutiny of a federal review.
The Abbott government has appointed a three-member panel to investigate small-amount lenders who have been accused of charging interest of almost 300 per cent on loans.
The five-month investigation will consider various options including a national payday lender database, whether fees should be capped, and protections for welfare recipients.
Assistant Treasurer Josh Frydenberg says while payday lenders could help some people, protections were needed for the vulnerable.
"There are certainly cases where people have been irresponsible with their lending," he told ABC radio on Friday.
The review will also consider consumer leases and whether some of the rules that apply to payday lenders should be extended.
These leasing arrangements have led to situations in which renters of a $600 fridge pay $1700 by the end of the lease - and they don't even own it, Mr Frydenberg said.
The panel will report by the end of the year.
REVIEW WILL CONSIDER:
* Whether a customer's bank account should be considered on applications.
* Credit histories and rejections based on past loan defaults.
* Loan contracts and credit limits.
* Statements about alternatives to payday loans.
* Caps on fees and charges.
* Charges more than twice the loan amount for defaulters
* Protections for welfare recipients.
* Introduction of new national database of payday lenders.
* Other legal provisions in credit laws.
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