“This is a large group of people, who borrowed very small amounts of money, for very short periods of time, at high interest rates. None of them could hope to have run this case to see justice served without an effective class actions regime.”

The in-principle settlement comes almost a year after a Federal Court trial concluded, where Cash Converters faced allegations of systematically breaching credit protection limits in giving unsecured personal loans to vulnerable borrowers.

The company settled one part of the class action on the first day for $16.4 million which related to cash advance loans to around 30,000 Cash Converter clients. It was added onto the personal loans claim being resolved in court this week.

Consumer laws in Queensland, which commenced in 2008, saw the maximum interest chargeable capped at 48 per cent per annum, inclusive of credit fees and other related charges under the credit contract between the client and company.

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The case Maurice Blackburn managed was that the “brokerage” fee, implemented by Cash Converters to coincide with these laws, was a mechanism to avoid their effect. It would ensure Cash Converters obtained a greater return than the laws permitted.

Ms Nagy said of this case, which will see a return of $59 million to clients: “More than 60 per cent of the people involved in the case have annual incomes of somewhere between $12,000 and $35,999 so these types of loans are often a last resort and the type of compensation we have secured for them today is extremely meaningful.

“We know that this compensation makes a noticeable difference to lives of the people we represent because they tell us the positive impact it has on their day-to-day.”

naomi.neilson@momentummedia.com.au