A Mandurah-based payday lender that collected exorbitant fees and interest repayments from customers will pay them back $34,500.
A Mandurah-based payday lender that collected exorbitant fees and interest repayments from customers will pay them back $34,500.
The Australian Securities and Investments Commission fined Fair Go Finance for overcharging interest and fees on loans for 550 customers.
In some cases, the establishment fees charged on the ‘Flexi Loans’ products were more than double the maximum amount allowed under Australian law.
Asic identified the Flexi Loans as having been set up to circumvent legal protections for consumers.
While the company's contracts stated that loans could be repaid over a three-year period, customers found that they had to repay the loans much sooner than expected and were dealt a fee if they didn't.
“Asic identified that Fair Go Finance charged establishment fees of more than twice the 20 per cent maximum allowed,” the watchdog said in a statement.
“Furthermore, in a number of instances the total amount repaid by consumers over the term of the loan exceeded the maximum amount allowed under the National Credit Act.”
Asic deputy chairman Peter Kell said some payday lenders were still attempting to avoid key protections for consumers of small amount loans.
In its response, Fair Go Finance defended its position and said it had sought legal advice for all of its credit products and was committed to being a responsible lender.
"It was not our intention to avoid these protections and put our customers in a worse position," Fair Go Finance managing director Paul Walshe said.
"We have an important relationship with our customers and it is essential we are transparent about the costs of loans."
As a result of the review, the company is contacting affected customers and making refunds.
