The Federal Court has today awarded record penalties totalling $18.975 million against payday lender, The Cash Store, and loan funder, Assistive Finance Australia for their failure to comply with consumer lending laws.
The Court handed down the penalty following its 26 August 2014 decision in ASIC v The Cash Store that TCS and AFA failed to comply with their responsible lending obligations and that TCS had unconscionably sold “useless” consumer credit insurance to customers, the majority of whom were on low incomes or in receipt of Centrelink benefits.
The penalty is the largest civil penalty ever obtained by ASIC. The decision demonstrates the importance of lenders complying strictly with their responsible lending obligations, including making proper inquiries about the consumer’s income and living expenses and obtaining all necessary information to enable a meaningful suitability assessment to be made.
ASIC Deputy Chair Peter Kell said, ‘This is a landmark case for the consumer credit regime and is essential reading for all credit licensees. The significant size of the penalty imposed shows ASIC and the Court take these obligations very seriously, as must all lenders, no matter how small the loan is.
‘ASIC is all about making sure people taking out loans have trust and confidence in the consumer credit sector and that those offering credit obey the law. And those laws have responsible lending provisions that aim to protect consumers of credit services from taking out loans they can’t afford and to stop businesses from taking unfair advantage of vulnerable people.
‘That is why we brought this case and this is what the Federal Court has recognised with this penalty’, Mr Kell said.