The Minister for Financial Services, Bill Shorten, has released a revised draft of proposed payday lending regulation, which eases planned restrictions on high-cost, short-term finance contracts.When the first draft of the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 was released, in August last year, it said lenders would be limited to charging an upfront fee of 10 per cent of the total amount borrowed and two per cent each month for the life of the loan. Apart from fees payable in the event of default, the lender would not be allowed to apply any other charges. The two per cent monthly charge was to apply to "the first amount of the credit contract, excluding the upfront fee."In the latest version of the bill, released on Tuesday, the limit on the upfront fee had been increased to 20 per cent and the monthly charge to four per cent.The cap applies to finance contracts of up to $2000 that run for less than two years.Other parts of the bill are unchanged. For larger loans, a credit provider is prohibited from entering into a contract where the annual "cost rate" exceeds 48 per cent.Lenders will not be allowed to refinance small-amount contracts. The aim is to stop debt rolling over and compounding.The lender will be required to inform consumers of other options, such as Centrelink advances, no-interest and low-interest loan scheme run by community organisations, and the availability of hardship programs run by credit providers and utilities.The changes to the cap come in response to recommendations of the Parliamentary Joint Committee on Corporations and Financial Services, which inquired into the bill and reported in December that the proposed reforms "did not strike the right balance between consumer protection and industry viability."The committee said the evidence presented did not support the proposed fee and rate caps, and it recommended that the Government "revisit" the measures and undertake further consultation with stakeholders.The consumer lobby has attacked the changes, arguing that the new limits will result in very high effective interest rates on short-term loans. But the Government appears to have made its final call. In a discussion paper, released on Tuesday, it said: "The Government has conducted extensive consultations with stakeholders in relation to the legislative reforms proposed in the Enhancements Bill. Accordingly, the discussion paper does not seek any views on these reforms."