Association throws support behind penalised lender

The National Credit Providers Association (NCPA) has made a formal response to the corporate watchdog’s action against Fair Go Finance.

Last Tuesday, ASIC announced that Fair Go Finance Pty Ltd paid $34,000 in infringement notices for overcharging interest and establishment fees on payday loans.

An ASIC investigation into Fair GoFinance's 'Flexi Loan' product identified that the loans were set up in a manner that attempted to avoid the protections offered to consumers under the National Credit Act.

However, NCPA chief executive Phil Johns said the Flexi-Loan product saved customers money in the majority of cases.

“Fair Go Finance, like all of NCPA’s members, is a responsible lender and ASIC’s investigation in this case found no issue with our member’s responsible lending processes,” Mr Johns said.

“What is important to remember is that Fair Go Finance, like all of our members, consulted legal counsel and followed their advice to ensure that beyond possible doubt, their products met national credit contract laws, was safe for consumers and met ASIC’s standards.

“Our member reports that at no time was any indication given by their legal advisers that this product would cause any harm to consumers or concern to ASIC. For clarity, no breach of the National Consumer Credit Protection (NCCP) Act was found by ASIC.”

Mr Johns said the case is simply a differing of legal opinion on the interpretation of the NCCP Act between lawyers.

“Even though Fair Go still believes the legal advice they received is correct and that the product is legal, they took the commercial decision to simply comply with ASIC’s wishes,” he said.

“This saw them stop providing the product immediately, pay the fines, refund some customers (even though the majority of consumers were financially better off) and move on with business, rather than fight it out in the courts, which is not commercially viable.”

What the NCPA finds “frustrating”, Mr Johns said is the continued use of the term ‘payday loan’ to describe the product it was investigating when it was not a payday loan.

“First and foremost, the concept of payday lending, where credit is required to be paid back on a borrower’s next payday, was made illegal in March 2013,” he said.

“For ASIC as a financial services regulator, operating amongst knowledgeable professionals, who know the correct terminology, we find it not only frustrating, but misleading.

“We are under no illusion that we’re the perfect industry, but we still deserve equal treatment when we’re trying to do the right thing for consumers and the industry."

[Related: Penalised lender responds to ASIC action]