An online Australian lender has defended one of its loan products after an ASIC investigation saw the product banned, saying it was not prohibited by laws governing Small Amount Credit Contracts (SACCs).
As reported in Australian Broker
yesterday, following an ASIC investigation, Fair Go Finance was ordered to refund approximately 550 consumers around $34,500 for the interest and fees it collected from consumers in excess of the maximum amount allowed under the NCCP.
However, Paul Walshe, the managing director or Fair Go Finance has defended the Flexi Loan, saying the lender seeks formal legal advice from a reputable law firm regarding compliance of all its processes and consumer protections, and that the law governing SACCs did not prohibit the Flexi Loan.
“We created the Flexi Loan to give customers a choice when taking out a personal loan and to better meet the requirements of some customers. Not only did the product give customers the flexibility to later the amount and length of repayments without charge or being in default, it was on average $164 cheaper than the alternative SACC loan.”
However, whilst the product was not prohibited by the laws governing SACCs, Walshe did admit that the purpose of the loan may not have transparent enough in hindsight and was removed immediately following ASIC’s review.
“In some cases customers paid back their loan quicker than they anticipated, which, in hindsight, meant a SACC loan could have been a better product for them. Had this been known at the time the customer took the loan, they would have either chosen or been offered a SACC loan,” Walshe said.
“It was not our intention to avoid these protections and put our customers in a worse position. We have an important relationship with our customers and it is essential we are transparent about the costs of loans.”
ASIC’s review found no concerns with any of the company’s other loan products, manuals, procedures and files.
“Fair Go Finance is 100% committed to being a responsible lender, carrying out in-depth checks, speaking with borrowers to assess their needs and providing financial products which meet their needs,” Walshe said.