A payday lender has been levied with record penalties for offences relating to consumer credit insurance and loans.
The Federal Court has ordered payday lender The Cash Store (TCS) and loan funder Assistive Finance Australia to pay penalties totalling almost $19 million, after ASIC prosecuted them for failing to comply with consumer lending laws.
Both companies are Canadian-owned, with The Cash Store currently in liquidation.
Most of the penalties relate to breaching responsible lending laws but the court also found that TCS had unconscionably sold useless consumer credit insurance to low-income earners.
ASIC Deputy Chairman Peter Kell says that conduct occurred on a systemic scale; TCS sold more than 182,000 consumer credit insurance policies but only 43 customers received a payout.
“This is a landmark case for the consumer credit regime and is essential reading for all credit licensees,” he says.
“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.”