Payday lender Cash Converters will refund consumers millions of dollars and pay an infringement notice after an investigation by the Australian Securities and Investments Commission (ASIC).
ASIC had raised concerns that the company had failed to make reasonable inquiries into consumers’ income and expenses and the loans they issued were “unsuitable”.
Cash Converters has paid a total of $1.35 million for 30 infringement notices from ASIC.
It has also agreed to refund eligible consumers $10.8 million in fees through a remediation program overseen by an independent expert who will report to ASIC.
ASIC also flagged concerns that Cash Converters had not taken reasonable steps to verify consumers expenses in accordance with its responsible lending obligations.
The regulator’s deputy chairman Peter Kell said he is particularly worried about lending to welfare recipients.
“ASIC is seeking to protect financially vulnerable consumers, many of whom are recipients of welfare payments, from falling victim to unsuitable payday loans,” he said.
“Payday lending is a high priority area for ASIC, and we will continue to pursue lenders who do not follow their responsible lending obligations.”
The independent expert will also review Cash Converters’ business operations.
Consumers who had two or more small amount loans in the 90 days before taking out another small amount loan through Cash Converters’ website during the period 1 July 2013 to 1 June 2016 will be contacted with information about their refund.
People are advised to lodge a complaint with the Credit and Investment Ombudsman if they believe they entered a loan contract with Cash Converters either in-store on online that was unsuitable.