ASIC has banned the former director of a payday lender, Peter Elfyd Llewellyn of Queensland, from engaging in credit activities for a period of ten years. Mr Llewellyn was banned following an investigation by ASIC into his conduct as a director of PR Finance Group Ltd (in liquidation) (PRFG) and Australian Money Exchange (in liquidation) (AMX).
ASIC found that AMX engaged in unlicensed credit activity during the period 1 July 2011 to 23 September 2013. AMX attempted to avoid the requirement to be licensed by structuring short term loans to avoid the application of the National Credit Code. AMX charged fees on short term loans which were in excess of the limits imposed by the National Credit Code.
ASIC also found that Mr Llewellyn was knowingly involved in AMX's unlicensed credit activity because, among other things, Mr Llewellyn participated in substantial decisions regarding business and legal issues affecting AMX. ASIC also found that Mr Llewellyn was not a fit and proper person to engage in credit activities.
Deputy Chairman Peter Kell said, 'The safeguards in the National Credit Code are designed to protect vulnerable consumers. ASIC will take action against persons who deliberately seek to avoid these obligations.'
Mr Llewellyn has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decisions.
Background
During the relevant period, AMX operated its business in Queensland and New South Wales, through branches located in Beenleigh, Caboolture, Darwin, Gosford, Liverpool, Mayfield, Rockhampton, St Marys, Stones Corner and Warrawong.
Section 29 of the National Consumer Credit Protection Act 2009 provides that a person must not engage in a credit activity if the person does not hold a licence authorising the person to engage in the credit activity.
Section 6 of the National Credit Code provides that a person engages in a credit activity if the person carries on a business of providing credit that is credit of the type covered by the National Credit Code.
The National Credit Code does not apply if the maximum amount of fees and charges does not exceed 5 per cent of the amount of credit. However, fees or charges payable for 'any service related to the provision of credit' are included in the calculation of the maximum amount.
AMX provided short term loans to customers in the form of a cheque. The loan fee for the loan was 5 per cent of the loan principal. AMX also charged a cheque cashing fee of 16 per cent of the loan principal.
ASIC found that the cheque cashing fee of 16 per cent of the loan principal was a fee or charge payable for a service related to the provision of credit. Accordingly the total fees and charges for short term loans provided by AMX was 21 per cent (which exceeded the 5 per cent threshold). Therefore the National Credit Code applied to AMX and AMX was required to be licensed during the period 1 July 2011 to 23 September 2013.
In October 2013, AMX was placed into administration and in May 2015, was placed into liquidation. The administrators sold the AMX business to Australian Finance Direct Pty Limited (Australian Credit Licence No. 390 417) who operate as O.K. Money.