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ASIC gives payday lender $478,000 bill

by Staff Reporter9 minute read
The Adviser

ASIC has taken action against a company that tried to sidestep regulation by acting as both a broker and lender.

The regulator announced that Fast Easy Loans has agreed to refund $477,900 to more than 2,000 consumers for charging a brokerage fee when it was prohibited from doing so.

"From September 2010 to June 2013, Fast Easy Loans acted as the broker for a related lender, Easy Finance Loans, and unlawfully charged consumers a brokerage fee in excess of certain state and territory interest rate caps," ASIC said.

"In charging a brokerage fee, Fast Easy engaged in credit activities without a credit licence."

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Fast Easy and Easy Finance used a model in which consumers simultaneously dealt with a broker and a payday lender, both of which had the same directors and premises.

"One reason for using this model was to provide a means, via the broker entity, to charge consumers an amount in excess of state and territory interest rate caps," ASIC said.

The federal government introduced legislation in July 2013 that limits monthly fees to 4 per cent and establishment fees to 20 per cent.

This legislation supersedes the state-based interest rate caps and makes it clear that broker costs do not sit outside the small amount loan cap.

Easy Finance has engaged a legal firm to conduct a compliance review of its business model to ensure it meets the NCCP requirements, according to ASIC.

ASIC said it would act to prevent payday lenders structuring their business to improperly impose fees and charges on consumers.

It also said that since 2010 almost $2 million has been refunded to more than 10,000 consumers who have been overcharged by payday lenders.

[Related: Financial System Inquiry calls for stronger ASIC]

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