ASIC: Payday lender used fake diamonds to get around laws
Fast Access Finance has been fined $730,000 for the sham.
The Federal Court has fined payday lender Fast Access Finance $730,000 for breaching consumer law by operating without a licence. The Australian Securities and Investments Commission (ASIC) alleged the lender to be operating a "sham" to skirt credit laws using the sale of diamonds, which the regulator alleges never actually existed. When handing down the penalty, the court said the Fast Access Finance's actions "comprised a pretence or sham."
The company would offer loans of between $500 and $2,000 to customers who signed a document which purported to be for the sale and purchase of diamonds. However, ASIC asserted this was a pretence because no diamonds were actually involved. The aim was to circumvent the maximum interest rate for the loans, which was 48%.
The Federal Court stated that: "Although the excessive interest paid by each customer may not have been large in absolute terms and by some standards, it was no doubt substantial for the customer in question. Such customers have little chance of recovering anything from any of the respondents. The most heinous aspect of the case is the deliberate and pre-meditated exploitation of these vulnerable people."
ASIC has said that there has been little to no cooperation from Fast Access Finance.
Deputy chairman Peter Kell said that "ASIC will continue to crack down on lenders who use avoidance models in an attempt to deprive consumers of these important protections."
The government has recently reviewed payday loan laws to better protect consumers, which included maintaining the current interest rate and fee cap.
Not sure how much you should be charged? Find out about payday loan interest rate caps.