A Wollongong “payday” lender has agreed to stop handing out the high-interest, short-term loans, after a successful class action joined by more than 8000 Illawarra customers.
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The case, lodged by Legal Aid NSW against the operators of five Cash AFX stores, was led by a 33-year-old pensioner who had borrowed $400 for seven weeks to pay for repairs to his car.
The man was then charged a “cheque-cashing fee” of $102, which was immediately taken from the loan proceeds by one of the companies involved in the case.
Wollongong Legal Aid lawyer Matthew Turner said the class action argued Cash AFX was “breaching five different laws including the National Credit Code” by charging this fee.
He argued the fee would have been in breach of the credit code as it would have been in excess of the 48 per cent interest cap which applies to regulated loans.
The claim included over 8000 people who had obtained payday loans in similar circumstances to the lead plaintiff over the past five years.
The defendants – ICM Group Finance, ICM Group Pty Limited and the sole director of the companies Michael O’Shea – initially rejected these claims but have now agreed to settle the case.
In the terms of settlement, Mr O’Shea agreed that his companies would not engage in any further payday lending and would not collect more than $40,000 in payments on outstanding loans. However the Cash AFX stores – in Wollongong, Warrawong, Corrimal, Warilla and Dapto – remain free to carry out other business activities.
“We are pleased that instead of fighting a protracted court case, the companies and their director agreed to settle the matter and not to engage in any further payday lending,” Mr Turner said.
“This is an excellent result for the people of the Illawarra. We believe credit provision should occur lawfully and be compliant with the regulations, so being able to stop this practice means a better outcome for people who want to borrow.”
He said payday loans were often given to vulnerable people who relied on Centrelink payments and needed money for unexpected expenses urgently.
“It is important that lenders of last resort obey the rules which limit how much they can charge for such loans, and it is essential that laws regulating payday lending are enforced to protect vulnerable borrowers,” Mr Turner said.
Kate McIlwain
For more than a decade, I've helped the Illawarra Mercury set the news agenda across the region. Currently I'm the paper's health reporter - covering the stories of Illawarra workers and residents in the wake of a global pandemic and at a time where our health systems are stretched to the limit.
For more than a decade, I've helped the Illawarra Mercury set the news agenda across the region. Currently I'm the paper's health reporter - covering the stories of Illawarra workers and residents in the wake of a global pandemic and at a time where our health systems are stretched to the limit.
