Issues Under Debate After ASIC Action Against Nimble

Mar 24 2016

Issues Under Debate After ASIC Action Against Nimble

"There must be individual assessment of a consumer’s situation"

An article in presents some of the issues under debate regarding the recent ASIC action against Nimble.

The article reports that, "The watchdog said it found “significant deficiencies” in Nimble’s compliance when providing short-term loans".  Furthermore, the article states that, "ASIC found that Nimble has not properly assessed the financial circumstances of many consumers, instead relying on algorithms which did not properly take consumers’ financial information into account."

In a reposnse to the ASIC action, Nimble CEO Sami Malia was reported in the article as saying, "These application assessment issues were entirely unintended and were resolved in collaboration with ASIC."

In the article, Gerard Brody from Consumer Action, "called for an interest rate cap of 48 per cent on all consumer credit, whereas currently small-amount loans under $2000 can often have annual effective interest rates of up to 400 per cent".

Mr Brody's comments were described as "misleading" by Phil Johns, chief executive of the National Credit Providers Association (NCPA) peak body representing small and medium amount lenders.

According to Johns, Nimble had stated that it "does not lend to anyone receiving benefits."  To classify everyone using small amount loans as ‘financially desperate" is misleading according to Johns and "does not represent the vast majority, who use this product successfully,”

Furthermore, "payday loan interest rates should not be calculated on an effective annual basis" according to Johns.  “The key word is ‘annual’ and does not become meaningful until a loan runs for one year, so for any loan that runs for less than a year it is misleading,” he said.

Johns concluded with a strong warning to all small amount lenders that, “It is clear under principles based legislation, lenders must take the most conservative view of the law, not necessarily the rule of law".  “A constant theme from ASIC is there must be individual assessment of a consumer’s situation.”

Click here to read the fulll article.