NCPA Statement on ASIC Announcement

Nov 09 2016

NCPA Statement on ASIC Announcement:

Cash Converters to pay over $12M following ASIC probe

MEDIA STATEMENT - 9 NOVEMBER 2016

A full pdf of this Statement is available at the bottom of this page.

The National Credit Providers Association (NCPA), the peak industry body for the small loans industry, has issued a statement with reference to ASIC’s announcement today about Cash Converters entry into the Enforceable Undertaking.

ASIC Announcement: http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-380mr-cash-converters-to-pay-over-12m-following-asic-probe/

The NCPA welcomes the outcome of this investigation, as this demonstrates that ASIC has the powers to monitor and enforce responsible lending obligations, under the National Consumer Credit Protection Act. Cash Converters note in a statement to the ASX that, “The Company has been given an extensive release by ASIC, and entry into the Enforceable Undertaking is without admission of wrong doing.”

While the convenient use of the term ‘payday loans’ continues to be used by the government and regulator, the fact is, that they were abolished in March 2013. The replacement Small Amount Credit Contract Laws are in place for a highly regulated and successful product called a Small Amount Credit Contract (SACC).

The fact that 64.5% of the 988,000 SACCs taken out in the 2014 - 2015 financial year, were by consumers whose main source of income was employment, demonstrates the need for this form of finance, in a properly regulated and protected environment from ASIC licensed lenders.

For this period, the average loan amount was $502 and the average length of a loan was 117 days. Nine in 10 expected repayments were met, with a continued repayment uptrend without problems, and further 99.95% of consumers never had a problem with their SACC, resulting in an incredibly low rate of 2.7 complaints per 100,000 contracts (Credit Investment Ombudsman 2014/15 report).

View a short video about consumer protections on SACCs here: http://smallloansbigneed.com.au/small-loans-big-need/what-big-protections-do-small-loans-have-for-consumers/

NCPA and its members are committed to working with ASIC in an open and transparent manner to continue improving the performance of the industry and ensuring that where there are legitimate complaints, they are addressed quickly and in favour of the consumer.

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