Around 68,000 Queensland Cash Converters clients have today secured $42.5 million in compensation over allegations the payday lender breached Queensland credit laws by effectively charging borrowers interest rates of more than 175 per cent per annum.
Australia's leading class action team at Maurice Blackburn Lawyers announced today that the in-principle settlement comes almost a year after a Federal court trial concluded, where Cash Converters faced allegations they had systematically breached credit protection limits in giving unsecured Personal Loans to vulnerable borrowers.
The company settled one part of the class action on the first day of trial for $16.4 million, which related to Cash Advance loans to around 30,000 Cash Converters clients. This is in addition to the Personal Loans claim being resolved today.
Consumer laws in Queensland that commenced in 2008 capped the maximum interest chargeable at 48 per cent per annum, inclusive of credit fees and charges under the credit contract. The case that was put on behalf of Queensland borrowers was that the "brokerage" fee, implemented by Cash Converters to coincide with those laws, was merely a mechanism to avoid their effect, and to ensure Cash Converters obtained a greater return than the laws permitted, and was unlawful or unconscionable.
The case, which will now mean a total of almost $59 million is returned to Queensland Cash Converters clients, has been run by Principal Lawyer at Maurice Blackburn Miranda Nagy. Ms Nagy also ran two class actions against Cash Converters for similar breaches in NSW, successfully settling those class actions in 2015 for $23 million.
"These class actions are prime examples of how the class action regime works to promote access to justice for the most disadvantaged in our community," Ms Nagy said.
"This is a large group of people, who borrowed very small amounts of money, for very short periods, at high interest rates. None of them could hope to have run this case to see justice served, without an effective class actions regime.
"More than 60 per cent of the people involved in this case have annual incomes of somewhere between $12,000 and $35,999, so these type of loans are often a last resort and the type of compensation we have secured for them today is extremely meaningful.
"We know that this compensation makes a noticeable difference to the lives of the people we represent because they tell us the positive impact it has on their day to day living."
The claim is settled without admission of liability and is subject to Court approval. Those eligible for payments will be given formal notice of the settlement in accordance with orders to be made by the Federal Court and need do nothing at this stage.
