ASIC last November secured an Enforceable Undertaking against Cash Converters under which approximately 55,000 Australians will be refunded their share of $10.8 million due to Cash Converters breaching their responsible lending obligations for small amount credit contracts. This program is being overseen by an independent expert.
I am advised by ASIC that they are currently investigating Cash Converters in relation to debt collection laws.
In addition, ASIC has advised that Cash Converters has been required to engage that same independent expert to review its current business operations and compliance with the consumer credit regime and report to ASIC.
Finally, Cash Converters has been fined an additional $1.34 million penalty.
This is Australia’s largest compensation program for customers of small amount credit contract providers to date and a significant penalty.
Beyond the compensation program, Australian consumers who believe that Cash Converters has breached its obligations when providing small amount credit contracts can still seek redress through the Credit and Investments Ombudsman. The ombudsman is free for all consumers to access, makes independent decisions and can award compensation of up to $309,000 per consumer.
ASIC have confirmed today that they have the ability to take action against Cash Converters for breaches of responsible lending laws, the ASIC Act (such as misleading, deceptive or unconscionable conduct), debt collection laws or criminal conduct, arising from Cash Converters’ current or future activities.
ASIC also retains the ability to take action in respect of Cash Converters’ debt collection that relates to all loans before 9 November 2016.
Following an independent review, the Turnbull Government is acting to better protect consumers who use small amount credit contracts. The Government’s changes will strengthen the protections available under the National Consumer Credit Protection Act.
The Government has committed to progressing legislation this year and welcomes bipartisan support on this much needed reform.