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$42.5m class action payout to be shared by nearly 70k Aussies
About 68,000 Queensland Cash Converters customers will soon start receiving compensation payments after the Federal Court on Wednesday approved a $42.5 million settlement following a successful class action suit.
Tony Zhang
The approval means class action members – who include some of Queensland’s most vulnerable consumers – should start receiving compensation by late May or early June.
Maurice Blackburn Principal Lawyer Miranda Nagy said the Cash Converters case showed the importance of class actions in providing access to justice to those that might otherwise be locked out.
“In the present difficult and uncertain economic environment, where so many people are facing hardship, we are really pleased to be able to successfully resolve the class action and ensure that such a large group of people will receive compensation,” Ms Nagy said.
“We are grateful to the court and other parties that this matter was settled in these very trying times under very difficult circumstances.
Consumer laws in Queensland that commenced in 2008 capped the maximum interest chargeable at 48 per cent per annum, inclusive of credit fees and charges under the credit contract.
The case that was put on behalf of Queensland borrowers was that the “brokerage” fee, implemented by Cash Converters to coincide with those laws, was merely a mechanism to avoid their effect, and to ensure Cash Converters obtained a greater return than the laws permitted, and was unlawful or unconscionable.
This year Cash Converters’ chief executive Brendan White had unexpectedly resigned on the same day the pawnbroking company’s half-yearly net loss blew out to $19.4 million.
The executive changes coincides with a deeper interim loss caused by a $42.2 million settlement from a class action against the payday lender after it had allegedly engaged in unconscionable conduct when providing personal finance loans.
The Perth-headquartered company, which operates in over 18 countries saw first-half loss nearly triple from $5.2 million in the December half a year ago.
Its earnings before interest, tax, depreciation and amortisation returned a loss of $12.8 million.
Ms Nagy said these class actions are prime examples of how the class action regime works to promote access to justice for the most disadvantaged in our community.
“This is a large group of people, who borrowed very small amounts of money, for very short periods, at high interest rates,” Ms Nagy said.
“None of them could hope to have run this case to see justice served, without an effective class actions regime.
“More than 60 per cent of the people involved in this case have annual incomes of somewhere between $12,000 and $35,999, so these type of loans are often a last resort.”
