Payday lenders Good to Go Loans and Web Moneyline have entered into an Enforceable Undertaking with ASIC to cease using a loan product following concerns raised by ASIC that the product may not have complied with the small amount credit contract provisions under the National Consumer Credit Protection Act 2009 (National Credit Act).
ASIC's investigation identified that the loan product, called OACC2, was provided to consumers on terms which fell outside the definition of a small amount credit contract. However, on the same day consumers entered into an OACC2 loan, almost all of the OACC2 agreements were modified to repay the loan at higher regular repayment amounts over a shorter period of time, which may have exposed consumers to a higher risk of default. Good to Go Loans and Web Moneyline may have charged above the cap on fees and charges had the loans been construed as small amount credit contracts as defined under the National Credit Act.
Under the Enforceable Undertaking , Good to Go Loans and Web Moneyline are required to:
- Write off all outstanding OACC2 loans including any outstanding debts which have arisen as a result of entering into these loans
- Notify the relevant credit reporting body that these loans have been settled, in order to correct the affected consumers' credit records
- Not enter into the OACC2 loan product with any new consumers
ASIC deputy chairman Peter Kell
said, "Financially vulnerable consumers can be at particular risk from this sort of activity, and in many cases will have little real understanding of the greater risks of default they are being exposed to. ASIC will take action to protect those consumers from falling victim to unsuitable payday loans."
All consumers with outstanding debts from OACC2 loans taken out between 21 August 2014 and 26 May 2015 are not required to make any more payments and will shortly receive communication from Good to Go Loans and Web Moneyline confirming that their loan is now finalised.