Liquidated payday lender guilty of misconduct abroad

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Liquidated payday lender guilty of misconduct abroad

Thursday Sep 4th , 2014

After closing its doors in the UK, troubles for payday lender Cash Store' have continued overseas – facing a class-action lawsuit in Canada accompanied by a crushing verdict against its Australian brand. The Australian branch behaved "unconscionably," the ASIC- Australian Securities and Investments Commission (FCA equivalent) has stated.

Payday lender The Cash Store Pty (TCS) was in liquidation in Australia at the time of the charges. It had sold credit insurance to customers on low incomes "when it was unlikely that that insurance could ever provide any benefit," the docket reads.

ASIC Deputy Chairman Peter Kell said: "'This is a landmark case for the consumer credit regime. [...] ASIC also welcomes the court's findings about unconscionable conduct by TCS, which occurred on a systemic scale, in the sale of inappropriate add-on insurance products. In more than 182,000 consumer credit insurance policies sold by TCS, there were only 43 consumers who received a payout."

The maximum penalty for a corporation in breach of responsible lending and credit guide laws is $1.1 million for each contravention. TCS has seven against it so far. The matter will be listed for a further hearing in relation to the civil penalties payable by TCS and AFA after 17 November 2014.

In other news, the UK Cash Store has left behind four outstanding mortgages upon entering administration, according to files obtained by Loan Talk from Companies House UK.

The files show that mortgages and rent deposits are owed to Barclays bank, Kerwal Limited of Liverpool, Portcullis Investments of Surrey. Apart from the £5000 outstanding to Kerwal for the ground floor of a property based in Walton Vale, Liverpool, the addresses and debt sums are undisclosed.

TCS is wholly-owned by Canadian company The Cash Store Australia Holdings Inc. Last week, the Superior Court of Justice in Ontario upheld a class action suit against Cash Store for alleged breaches of the Canadian Payday Loans Act.

This trial is ongoing.

The Canadian corporation, Cash Store Financial Services Inc provided a default status report on September 2nd.

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