Payday lender Fast Easy Loans to refund customers over $477,900
Article by Rebeccah Elley
More than 2,000 consumers will be refunded $477,900 after a review by the Australian Securities and Investment Commission found Fast Easy Loans charged an unlawful brokerage fee. ASIC said in charging a brokerage fee, Fast Easy engaged in credit activities without a credit licence.
Fast Easy Loans has agreed to refund any brokerage fees above the state-based interest rate caps of 48% by November 2014 in Queensland, New South Wales and the Australian Capital Territory.
While the Payday lender didn’t exceed interest rate caps in other states, Fast Easy has said customers in the Northern Territory, Western Australia, South Australia, Victoria and Tasmania can also claim a refund for the brokerage fee.
Payday lenders work by lending customers small amounts of money with high interest rates attached and is defined by ASIC as being $2000 or less with a term between 16 days and one year. Mozo advises Aussies looking for a loan to always search the personal loan market for a competitive deal.
ASIC deputy chairman Peter Kell warned, “ASIC will act to prevent payday lenders structuring their business to improperly impose fees and charges on consumers.”
“Our message to the industry and those who advise payday lenders is clear; if you set up business models to avoid the small amount loan cap, ASIC will take action.”
From 1 July 2013, only the following fees can be charged on small amount loans:
- a monthly fee of 4% of the amount lent
- an establishment fee of 20% of the amount lent
- Government fees or charges
- enforcement expenses, and default fees (the lender cannot recover more than 200% of the amount lent).