The financial services regulator has banned a director of a payday lender from engaging in credit activities for a period of three years, after he was found to have “created and caused” a trading "sham".
According to ASIC, Queenslander Robert Legat, the in-house legal counsel at Fast Access Finance (FAF) Pty Ltd, “created and caused" a lending model that was “designed to circumvent the 48 per cent legislative interest rate cap that would have been applicable to the loans”.
The company, which has stores in Burleigh Heads and Beenleigh, had been fined $730,000 earlier this year for breaching consumer credit laws by engaging in credit activities without holding an Australian credit licence.
The FAF Companies operated under a business model where consumers seeking small value loans (of amounts generally ranging from $500 to $2,000) were required to sign documents which purported to be for the purchase and sale of diamonds in order to obtain a loan.
However, ASIC found that there were no diamonds involved in the transaction and consumers had no intention of buying or selling diamonds. Instead, the purchase and sale contracts were “designed to camouflage what, in reality, were loan transactions to which the National Consumer Credit Protection Act 2009 (National Credit Act) applied”.
In March, the court fined the payday lender $730,000 for the trading “sham”.
ASIC has since found that Mr Legat was responsible for the model.
In a statement, ASIC said: “This conduct demonstrated a lack of judgement, integrity and professionalism on Mr Legat's part and a disregard for the law.
“ASIC determined that Mr Legat is not a fit and proper person to engage in credit activities.”
He has now been banned from engaging in credit activities for a period of three years, but he has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
ASIC deputy chair Peter Kell commented: “The National Credit Legislation contains important protections for consumers. ASIC will take action against people who seek to deprive consumers of these protections.”
[Related: ASIC suspends lender’s credit licence]
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