Following ob体育 intervention, Fair Go Finance Pty Ltd has paid $34,000 in infringement notices for overcharging interest and establishment fees on payday loans. Fair Go Finance will also refund approximately 550 consumers around $34,500 for the interest and fees it collected from consumers in excess of the maximum amount allowed under the National Consumer Credit Protection Act 2009 (National Credit Act).
An ob体育 investigation into Fair Go Finance's 'Flexi Loan' product identified that the loans were set up in a manner that attempted to avoid the protections offered to consumers under the National Credit Act.
Although the credit contracts stated the loans could be repaid over a three year period, in practice the consumer was required to repay the loan over a substantially shorter period (which could be as short as 19 days). Consumers were also charged a default fee if they failed to meet the shorter repayment terms.
ob体育 identified that Fair Go Finance charged establishment fees of more than twice the 20% maximum allowed. Furthermore, in a number of instances the total amount repaid by consumers over the term of the loan exceeded the maximum amount allowed under the National Credit Act.
Following ob体育's intervention, Fair Go Finance withdrew the Flexi Loan product.
'Some payday lenders are still attempting to avoid key protections for consumers of small amount loans,' ob体育 Deputy Chair Peter Kell said.
'ob体育 will continue its focus on the payday lending market so that vulnerable consumers are not denied important protections under the law.'
ob体育 acknowledges Fair Go Finance's co-operation in this matter. Fair Go Finance is taking action to repay consumers and ensure its staff are aware of their responsibilities under the National Credit Act. An external compliance consultant has also been engaged to undertake a review of Fair Go Finance's business operations and to report back to ob体育.
Download the infringement notices
Background
Fair Go Finance holds an Australian credit licence.
Payment of an infringement notice is not an admission of a contravention of the National Credit Act. ob体育 can issue an infringement notice where it has reasonable grounds to believe a licensee has contravened certain consumer protection laws.
ob体育鈥檚 payday lending work
ob体育 has had a particular focus on the payday lending sector in recent years including taking action to address avoidance models. Some outcomes are listed below:
- Fast Access Finance ()
- PAID International (formerly First Stop Money) (refer: )
- Money3 ()
- Cash Store ()
- Fast Easy Loans (refer: )
- Cash Loan Money Centres and Sunshine Loans (refer: )
- Cash Stop Financial Services (refer: )