Thorn Group Ltd (ASX: TGA) is likely to face tougher restrictions on its consumer leasing products through its Radio Rentals brand.

The federal government has adopted almost all recommendations from a review into consumer leasing and payday lending, which includes limiting payments to a maximum of 10% of their after-tax income, according to The Australian.

The government is also likely to go even further and announce restrictions on the maximum amounts to be repaid on consumer leases. Reports suggest the government supports a cap on the total amount of payments that can be made under a lease over a certain period.

Interest rates on payday lending loans were capped at a maximum of 48% per annum under laws introduced in 2013, but there is no cap on the cost of consumers leasing white goods, TVs and similar products from companies like Radio Rentals.

Radio Rentals received almost half its revenue of $90 million in 2015 through Centrepay – which allows Australians on Centrelink payments to pay their leasing costs before they get their cash. ASIC found in a review last year that consumers receiving Centrelink payments were being charged much higher prices than those advertised by lessors. In one case, the effective interest rate was 884%.

As ASIC deputy chairperson Peter Kell said, “Of particular concern is that the most financially vulnerable consumers in Australia are paying the highest lease prices for basic household goods. For two year leases, half the Centrelink recipients in our study paid more than five times the retail price of the goods.

Labor Senator Doug Cameron even proposed that Centrepay be restricted from paying consumer loans and leases.

Flexirent – a product of Flexigroup Limited (ASX: FXL) – also provides leasing finance for customers through the likes of JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN), but doesn’t use the Centrepay system. That hasn’t stopped customers complaining about its high interest rates though.

Payday lenders Cash Converters International Ltd (ASX: CCV) and Money3 Corporation Limited (ASX: MNY) are either shrinking their small loan books or exiting the sector entirely, given the issues they have faced including class actions and government crackdowns that probably make them marginal or unprofitable business lines.

Consumer leasing companies like Thorn could be next in line.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.