Regulations clarifying the rules governing small amount credit contracts have been registered. The regulations aim to stop payday lenders taking advantage of uncertainty about some of the rules.Since July last year there has been a cap on costs and a limit on fees that consumers can be charged for small amount credit contracts, covering consumer loans worth up to A$2000 and with a maximum term of 12 months.According to an explanatory memorandum accompanying the new regulations, since the introduction of the cap there has been uncertainty about the boundaries of some provisions."As a result of this uncertainty, some credit providers have avoided the cap on costs by using provisions in the legislation more broadly than they were intended for."The regulation clarifies the boundary between small amount and medium amount credit contracts, to ensure that the small amount lending cap applies to contracts where the borrower receives a maximum amount of $2000 in their hands, with fees and charges allowed to be additional.The regulation also ensures that where a small amount credit contract is provided, no additional amount, such as membership fees, account keeping fees or card fees, can be charged above five per cent of the amount of the credit.And it prohibits "introducers" from requiring payment. This rule addresses an avoidance practice where credit providers establish a brokerage arm to their business; the broker arranges credit with the credit provider and charges the borrower brokerage fees that are not included in the calculation of the cost cap.Under the terms of the cap introduced last year, payday lenders must limit their interest rates and charges where a finance contract is worth up to A$2000 and runs for less than two years. There is a limit of 20 per cent on any upfront charge and a limit of four per cent on monthly charges.For larger loans, a credit provider is prohibited from entering into a contract where the annual "cost rate" exceeds 48 per cent.