Financial Counselling Australia (FCA) attended today’s announcement in Sydney by Maurice Blackburn that they are commencing a class action against Cash Converters International and related entities.
Financial counsellors – who work in community organisations and assist people in financial difficulty – see many clients struggling with payday loans.
A survey of financial counsellors conducted in 2011 was overwhelming in its finding that short term, high cost loans harm, rather than help, clients. Many payday lending clients would benefit instead from access to free financial counselling.
FCA believes that unfair practices in the marketplace should be addressed. This class action will be important in testing whether the business model used by Cash Converters in New South Wales between 1 July 2010 and 30 June 2013, breached the interest rate cap of 48% that applied in that state during that time.
If the court finds this to be the case, thousands of low income consumers will be entitled to refunds of the amounts they were over charged above the 48% cap.
Over the past 12 months, FCA has met with the National Financial Services Federation, the peak body for micro-lenders, on a number of occasions and will continue to do so.
Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007.
Media Contact: Fiona Guthrie, 0402 426 835