It was her daughter's first birthday that tipped Perth mother Jayde Lowe into financial hardship.

Key points: Jayde Lowe borrowed $175 from Cigno and owed $935.50 a few months later

Jayde Lowe borrowed $175 from Cigno and owed $935.50 a few months later Cigno offers short-term loans of up to $1,000 but is not regulated by the National Credit Act

Cigno offers short-term loans of up to $1,000 but is not regulated by the National Credit Act There are calls for credit law reforms to ensure vulnerable people aren't ripped off

The 22-year-old, who has an intellectual disability and relies on a Centrelink pension for income, did not have enough money to buy food on February 19, let alone a gift for her child.

An advertisement on Facebook for Queensland-based short-term credit agent Cigno provided a quick fix.

"I borrowed $175 and that's it," Ms Lowe said.

Ms Lowe estimated it took half an hour to fill out the online form with her bank details, Centrelink statements and home address.

She said she did not speak to anyone from the company before the money arrived in her bank account at 7:00pm that same evening.

After missing a payment the following month, Ms Lowe was charged a $49 dishonour fee, plus $30 for a letter to notify her of the breach.

Ms Lowe sought help from a financial counsellor, who managed to get the fees waived. ( ABC News: Glyn Jones )

By the beginning of May, less than three months after she took out the loan, the total outstanding amount had climbed to $935.50.

The charges accrued — dishonour fees, account-keeping fees, change of payment date fees — amounted to more than 430 per cent of the original loan.

"I feel really angry and mad. They keep calling me every five minutes to get hold of me," Ms Lowe said.

"I understand I have to pay the money back, but they just want me to pay more, more, more on it."

Ms Lowe sought help from a financial counsellor at the City of Cockburn, in Perth's south, who managed to get the fees waived.

Since July, counsellors at the city have assisted three clients with Cigno loans, all of whom were solely reliant on a Centrelink income and in financial hardship.

One client had multiple loans, amounting to $675, and had repaid $1,740.65, with outstanding payments owing.

Company offers loans of up to $1,000

On its website, Cigno describes itself as an "agent", rather than a lender, arranging short-term cash loans of up to $1,000.

The company says its "choice lender" is Gold Silver Standard Finance Pty Ltd (GSSF), which is based in Southport, Queensland, where Cigno's head office is located.

"For all intents and purposes, as far as we can see, even off their own website, it is a payday loan," Financial Counsellors' Association (FCA) of WA executive officer Bev Jowle said.

Bev Jowle says reforms to federal legislation governing payday lenders are urgently needed. ( ABC News: Emily Piesse )

However, Cigno is not regulated by the National Credit Act — which protects consumers from unconscionable conduct — and is not subject to rules capping the amount of interest customers can be charged.

The Victoria-based Consumer Action Law Centre's director of policy and campaigns, Katherine Temple, said she believed Cigno's structure allowed the company to operate outside credit protection laws.

"Cigno uses a complex broker model to avoid our national credit laws," she said.

"This is a loophole … that needs to be closed to ensure that other vulnerable people aren't being ripped off by expensive short-term credit."

Hopes rest on Senate inquiry to fix sector

For those in the financial counselling sector, a Senate committee inquiry currently underway is expected to lead to better protections for consumers.

The inquiry into "credit and financial services targeted at Australians at risk of financial hardship" will examine payday lenders, 'buy now, pay later' providers and short-term credit companies.

Financial counsellors are urging a swathe of reforms, including capping payday loans at 10 per cent of a borrower's disposable income, as well as ensuring people cannot sign up to multiple concurrent loans.

Ms Jowle said lenders should also be required to detail their fee structure clearly, and check whether potential customers understand the terms of their loan.

"That to me is irresponsible lending, because they've not ascertained a person's capacity to even understand the contract in which they're entering," she said.

In its submission to the inquiry, Financial Counselling Australia said the current regulation "does not meet the expectations of the community".

"There is no doubt that these products were designed to avoid the National Credit Act and the specific and expansive obligations required under that Act," the FCA wrote.

The Senate Economics References Committee is due to complete its inquiry into credit and financial services on February 22.

No response from Cigno

The ABC requested an interview with Cigno by email and telephone, but did not receive a response from the company.

Cigno is not subject to rules capping the amount of interest customers can be charged. ( AAP: Alan Porritt )

On its website, Cigno states it is not subject to federal legislation governing consumer credit.

"Neither the lender nor Cigno is subject to the National Consumer Credit Protection Act 2009 ("the Act"), so the protections offered by the Act are not available to you with respect to this service that we provide, or any loan that you get from the lender," its website states.

"Although Cigno and GSSF are not subject to the National Consumer Credit Protection Act 2009, they both have adopted the protections afforded by the Act they believe to be best practice, and where practicable have sought to manifest those principles in their service."