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ASIC slaps Ferratum Australia with lawsuit

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Sarah Simpkins 7 minute read

The regulator has commenced a civil lawsuit against the personal lender, for allegedly hitting customers with prohibited fees and overcharging those who paid off loans early.

ASIC has alleged that between March 2019 and August 2021, Ferratum breached consumer credit protection laws in relation to small amount credit contracts by:

  • Charging borrowers prohibited fees such as direct debit fees when using certain credit cards and fees to alter direct debit arrangements
  • Entering into contracts with borrowers that imposed prohibited fees
  • Incorrectly calculating the amounts borrowers had to pay when they repaid their contracts early, leading borrowers to pay more than they had to, and
  • Failing to act efficiently, honestly and fairly by ensuring it had an accurate and reliable system to calculate, record and monitor the amounts required to pay out contracts early.

Under the National Consumer Credit Protection (NCCP) laws, a provider of small amount credit contracts must not impose fees beyond an establishment fee, a monthly fee, a fee payable in the event of a default in payment under the contract, or a government fee, charge or duty.

A borrower is also entitled to pay out their small amount credit contract at any time and can only be charged an amount that is calculated in accordance with the requirements of the NCCP Act.


But as stated in court documents, Ferratum allegedly used standard form contracts for 10,860 customers, which included:

  • A “DDR alteration fee” that stated it was payable “on a change being made to the DDR arrangement with you, at your request, at any time under the agreement” (with DDR being a reference to a direct debit request from a consumer’s bank account). Ferratum allegedly charged this fee on 105 occasions (a total of $2,625)
  • A “direct deposit fee” that stated it was payable “on making manual payment of account balance directly into Ferratum owned bank accounts”
  • A “returned mail fee” that stated it was payable when “postal mail is undeliverable to the address provided on your application. ASIC reported Ferratum charged this fee on 461 occasions (totalling $6,915) from 13 March 2019 to 30 September 2019, before charging it on 204 occasions from 1 October 2019 to 11 August 2021, totalling $5,161
  • An “additional contract request service levy” that stated it was payable “upon request by you to be provided with your loan contract where this has already been provided to you by us within the last 12 months”
  • A “Visa or MasterCard payment fee” that stated it was payable “on request by you to make payment of your account by a card service provider, either Visa or MasterCard”. Ferratum allegedly charged this fee on 30 occasions ($180 in total)
  • A “Returned Payment Fee” that stated it was payable when “funded loans being returned and repaid to client due to provision of incorrect bank information”.

ASIC also found that least 40 customers, from a sample of 147 who elected to repay their loan early were affected by Ferratum charging early termination costs that exceeded that permissible under the National Credit Code.

Further, during 13 March 2019 to 14 July 2020, ASIC found that of the sample of 147 consumers, 59 were undercharged the early payout amount and 48 were charged the correct amount – meaning 33 per cent in the sample had been charged correctly.

ASIC has also claimed that the company did not build a system that automatically calculated fees and removed the potential for human error, contrary to what it told the regulator in 2017.

The company allegedly purported to use an Excel spreadsheet, which required manual input of the relevant data, but kept no records of its calculation of the early payout amounts charged to customers.


Further, the regulator reported that Ferratum incorrectly asserted that its “practice of overcharging borrowers was rectified in 2018” in a letter from its solicitors sent in July last year.

ASIC deputy chair Sarah Court commented: “The credit protection laws are designed to protect consumers who need to access small amount loans.

“ASIC is concerned that the alleged conduct harmed consumers with low incomes and low account balances. These types of practices are especially harmful during the COVID-19 pandemic.”

Ferratum’s ultimate holding company is Multitude SE, a European public limited liability company based in Finland, which provides mobile and digital financial services to consumers and small businesses across 25 countries, mostly in Europe.

ASIC slaps Ferratum Australia with lawsuit
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is the news editor across Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

You can contact her on This email address is being protected from spambots. You need JavaScript enabled to view it..


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