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Monday 30 May 2016

16-167MR On-line lender to refund $35,000 after over-charging consumers

Following intervention by ASIC, Rescue Credit Pty Ltd (Rescue Credit), an online lender, has repaid in excess of $35,000 to consumers. These consumers had paid fees and charges in excess of those allowed under consumer credit laws.

ASIC was concerned that Rescue Credit, which offers medium amount credit contracts (MACCs), may have breached a number of its obligations under the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Act) and the National Credit Code, including:

  • applying fees and charges to MACCs in the range of 56% to 68%, which are in excess of the permitted annual cost rate of 48%;
  • providing unsuitable loans to consumers who had defaulted on existing credit contracts or were experiencing financial hardship; and
  • failing to provide consumers with legally required information the first time they defaulted on a direct debit payment.

Refunds have now been made by Rescue Credit to consumers with completed contracts, and current credit contracts have been amended so that the legal amount of fees and charges is paid by those consumers.

Rescue Credit will also appoint an independent consultant to review its overall compliance arrangements and a sample of consumer files over a period of 12 months. The independent consultant will report its findings to ASIC.

ASIC's Deputy Chairman Peter Kell said, 'The national credit legislation provides important protections to consumers ensuring they are not overcharged by credit providers. ASIC will continue to monitor the lending market to ensure compliance with these obligations and take action where credit providers have applied fees and charges in excess of the annual cost rate'.

Background

Rescue Credit holds an Australian credit licence.

MACCs, which are loans for amounts between $2,001 and $5,000 with terms between 16 days and two years, have fees limited to:

  • a one-off $400 fee; and
  • a maximum interest rate of 48%, including all other fees and charges.

Charges applied in excess of these limits contravene section 32A of the National Credit Code.

Recent ASIC activity and outcomes regarding breaches of the credit legislation involving lenders include:

  • 16-132MR ASIC bans a fifth broker from Get Approved Finance
  • 16-106MR Westpac car financier pays $493,000 for breaching consumer protection repossession laws
  • 16-089MR  Payday lender Nimble to refund $1.5 million following ASIC probe
  • 16-027MR Payday lender penalised for overcharging consumers
Last updated: 30/05/2016 12:00