ASIC media releases are point-in-time statements. Please note the date of issue and use the internal search function on the site to check for other media releases on the same or related matters.

Wednesday 11 September 2013

13-257MR ASIC takes civil action against The Cash Store

ASIC has launched legal proceedings against the payday lending business operated by The Cash Store, seeking financial penalties for breaching consumer credit laws, including the responsible lending obligations, and engaging in unconscionable conduct.

ASIC's civil penalty proceedings have been filed in the Federal Court of Australia in Melbourne against Australian credit licensees The Cash Store Pty Ltd (TCS) and Assistive Finance Australia Pty Ltd (AFA).

ASIC claims that TCS and AFA have provided unaffordable loans to a large number of their customers who were on low incomes or in receipt of Centrelink benefits. In addition, ASIC claims that TCS has acted unconscionably and unfairly in selling insurance in relation to these loans to these customers when it was unlikely that they could ever make a claim on that insurance.

‘ASIC is committed to maintaining the integrity of the credit industry by ensuring that providers of credit operate their businesses in compliance with the credit laws,’ ASIC Commissioner Greg Tanzer said.

‘The responsible lending provisions [of the National Consumer Credit Protection Act 2009 (National Credit Act)] are important in protecting consumers from taking out loans they can’t afford and the prohibition against unconscionable conduct prevents businesses from taking unfair advantage of vulnerable consumers.’

ASIC is seeking declarations that TCS and AFA contravened their responsible lending obligations, TCS engaged in unconscionable conduct, and financial penalties for those breaches.

The proceedings are listed for a directions hearing in the Federal Court in Melbourne on 27 September 2013.


The maximum penalty for breaching the relevant credit laws is $340,000 for each contravention and the maximum penalty for a breach of the unconscionable conduct provision of the Australian Securities and Investment Commission Act 2001 is $1.7 million for each contravention. ASIC alleges that TCS and AFA have committed multiple breaches of the credit laws.

TCS acts as a broker for consumers seeking small amount or payday loans. All the loans organised by TCS were provided by AFA. TCS is a wholly-owned subsidiary of a Canadian company, The Cash Store Australia Holdings Inc, and is listed on the Toronto Stock Exchange. AFA is also a wholly owned subsidiary of a Canadian company, Assistive Financial Corp.

The National Credit Act requires credit licensees to meet responsible lending conduct obligations.

The key responsible lending obligation is that credit licensees or providers must not suggest, assist with, or provide a credit product that is unsuitable for a consumer. Before a credit licensee suggests, assists with, or provides a new credit contract or lease to a consumer, the credit licensee (or provider) must:

  • make reasonable inquiries of the consumer about their requirements and objectives in relation to the credit contract

  • take reasonable steps to verify the consumer’s financial situation

  • based upon these inquiries, assess whether the credit product is unsuitable for the consumer and only proceed if the credit product is not unsuitable, and

  • give the consumer a copy of the assessment if requested.

A contract will be unsuitable if the consumer would be unable to repay it without substantial hardship or it will not meet the consumer’s requirements or objectives. The requirements also apply where the credit limit on an existing contract is being increased.

Editor's note 1:

Between ASIC and Assistive Finance, on 27 September 2013 the Federal Court of Australia made orders by consent that:

  • ASIC file and serve its statement of claim by 4 October 2013

  • Assistive Finance file and serve any defence by 15 November 2013

  • ASIC file and serve any reply by 29 November 2013

  • the proceeding be listed for further directions on 6 December 2013.

The administrators for The Cash Store Pty Ltd have consented to the proceeding continuing against the company and filed a notice with the court stating that The Cash Store would submit to any orders that the Court may make. This means that The Cash Store will not actively participate in the proceeding, although ASIC will still have to satisfy the court that it should make the orders requested by ASIC.

Download the orders from Commonwealth Courts portal

Editor's note 2:

On 6 December 2013 the matter was heard and orders were made including leave for ASIC to proceed against The Cash Store Pty Ltd (In Liq). The matter will next be heard on 14 - 15 April 2014.

Editor's note 3:

On 14 and 15 April 2014 the matter was heard in the Federal Court of Australia before her Honour Justice Davies. ASIC presented its case and the matter was adjourned to a date to be fixed.

Last updated: 17/04/2014 12:00