A not-for-profit lender will pay consumers back around $157,000 in overcharged interest following an ASIC enforcement.
ASIC has said Fair Loans Foundation Pty Ltd, a firm providing credit to financially disadvantaged consumers as an alternative to payday loans, has entered into an enforceable undertaking to pay overcharged interest back to around 864 borrowers. The regulator said the company advertised interest rates lower than the actual rates charged, alleging that Fair Loans advertised rates of 15.95% or 19.95% when rates were actually 28.25% of 35%.
"The cost of credit is a key factor for consumers when shopping around for a loan, and the law requires that representations about cost both in advertising and loan contracts, are accurate. ASIC will not accept overcharging, and where necessary will take action to ensure consumers are not out of pocket," ASIC deputy chairman Peter Kell said.
In addition to the enforceable undertaking, the watchdog also issued to infringement notices for related NCCP breaches totalling $22,000. ASIC also acknowledged in a release that Fair Loans had already repaid overcharged interest to "a significant number" of affected borrowers.