A payday lender has been told to refund more than 2,000 consumers after ASIC found it charged a brokerage fee when it was prohibited from doing so.
Fast Easy Loans Pty Ltd acted as the broker for a related lender, Easy Finance Loans Pty Ltd and unlawfully charged consumers a brokerage fee in excess of certain state and territory interest rate caps. In charging a brokerage fee, Fast Easy engaged in credit activities without a credit licence.
Further, Fast Easy and Easy Finance operate under a business model where consumers deal with both a broker and a payday lender at the same time, with the entities having the same directors and owners and operate out of the same premises. Using this model provides a means, via the broker entity, to charge consumers an amount in excess of state and territory interest rate caps.
Commonwealth legislation introduced a cap on payday loans in July 2013, which supersedes the state and territory-based interest rate caps. ASIC Deputy Chairman Peter Kell said broker costs do not sit outside the small amount loan cap.
“ASIC will act to prevent payday lenders structuring their business to improperly impose fees and charges on consumers,” he said.
“Our message to the industry and those who advise payday lenders is clear; if you set up business models to avoid the small amount loan cap, ASIC will take action.”
Fast Easy has to pay a total of $477,900 in compensation to the consumers affected. ASIC's action against Fast Easy means that since 2010, close to $2 million dollars has been paid in refunds to over 10,000 consumers who have been overcharged when taking out a payday loan.