Payday lender, Fair Go Finance, has been ordered to pay $34,000 in infringement notices following an ASIC investigation for overcharging interest and establishment fees on payday loans.
Fair Go Finance has been ordered by the regulator 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 National Consumer Credit Protection Act 2009 (NCCP).
The ASIC investigation into Fair Go Finance's Flexi Loan product identified that the loans were set up in a manner that attempted to avoid the protections offered to consumers under the NCCP.
Although the credit contracts stated the loans could be repaid over a three year period, in practice the consumer was required to repay the loan over a substantially shorter period, which could be as short as 19 days. Consumers were also charged a default fee if they failed to meet the shorter repayment terms.
According to ASIC, Fair Go Finance also charged establishment fees of more than twice the 20% maximum allowed. In addition, the total amount repaid by consumers over the term of the loan exceeded the maximum amount allowed under the NCCP in a number of instances.
Following ASIC’s intervention, Fair Go Finance withdrew the Flexi Loan product.
“Some payday lenders are still attempting to avoid key protections for consumers of small amount loans,” ASIC deputy chair Peter Kell
“ASIC will continue its focus on the payday lending market so that vulnerable consumers are not denied important protections under the law.”