CASH CONVERTERS FORCED TO REPAY $11M ON LOANS

CASH CONVERTERS FORCED TO REPAY $11M ON LOANS

THE corporate watchdog has forced pay-day lender Cash Converters International (ASX:CCV) to repay borrowers $11 million after finding the company had failed to adequately assess the ability to repay loans.

Cash Converters has been issued with an enforceable undertaking to refund consumers $10.8 million on about 118,000 loan contracts. It has also paid a $1.35 million penalty for the infringements issued by the Australian Securities and Investments Commission.

ASIC says the infringements relate to small loans issued by Cash Converters through its website, arguing that the company 'failed to make reasonable inquiries into consumers' income and expenses, particularly in situations where the small amount loan was presumed by the credit legislation to be unsuitable'.

It says Cash Converters had not properly assessed the expenses of the borrowers through verification by bank statements, instead relying on its own internal calculations of likely expenses.

In a statement to the ASX, Cash Converters says it is will pay back 'certain customers' who had applied for small-sum loans between July 1 2013 and June 1 2016 in accordance with ASIC's findings.

The company has already made provisions for the $12 million in refunds and infringement penalties in its accounts.

Earlier this year, Gold Coast-based lender Nimble was forced to repay 7000 customers $1.5 million after a similar probe by ASIC into its activities.

Others in the firing line include BMW Finance, which paid $391,000 for breaching responsible lending and repossession laws, and Westpac (ASX:WBC) which paid $1 million following issues surrounding credit card limit increases.

"ASIC is seeking to protect financially vulnerable consumers, many of whom are recipients of welfare payments, from falling victim to unsuitable payday loans," says ASIC deputy chairman Peter Kell.

"Payday lending is a high priority area for ASIC, and we will continue to pursue lenders who do not follow their responsible lending obligations."

Under the enforceable undertaking, Cash Converters has engaged an independent expert to review its operations and compliance practices.

Cash Converters' shares were trading more than 6 per cent higher at 35c by the midday session following today's announcement.

 

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Does your pay structure answer today's challenges?
Partner Content
If you are not reassessing how your organisation remunerates and rewards employees as a...
Aon
Advertisement

Related Stories

Reprieve for EML Payments as Irish regulators allow new customers and programs

Reprieve for EML Payments as Irish regulators allow new customers and programs

The dreaded 'Bank of Ireland Update' has become an ominous ...

Afterpay launches new money management app called Money

Afterpay launches new money management app called Money

Afterpay (ASX: APT) has officially launched its Money app in A...

Oversubscribed SPAC sets the scene for next high-profile Australian or NZ NASDAQ listing

Oversubscribed SPAC sets the scene for next high-profile Australian or NZ NASDAQ listing

Leading Australian investors including Uluwatu Capital, Artesian an...

CBA’s crypto play will see “greater adoption than before” of digital assets

CBA’s crypto play will see “greater adoption than before” of digital assets

Today’s announcement from Australia’s largest bank that...