Rescue Credit Pty Ltd (Rescue Credit), an online lender, has refunded more than $35,000 to consumers who paid fees and charges in excess of those allowed under consumer credit laws.
ASIC was concerned that Rescue Credit, which offers medium amount credit contracts (MACCs), may have breached a number of its obligations under the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Act) and the National Credit Code, including:
• applying fees and charges to MACCs in the range of 56 to 68 per cent, which were in excess of the permitted annual cost rate of 48 per cent;
• providing unsuitable loans to consumers who had defaulted on existing credit contracts or were experiencing financial hardship; and
• failing to provide consumers with legally required information the first time they defaulted on a direct debit payment.
According to an ASIC statement, refunds have now been made by Rescue Credit to consumers with completed contracts, and current credit contracts have been amended so that the legal amounts of fees and charges are paid by those consumers.
Rescue Credit will also appoint an independent consultant to review its overall compliance arrangements and a sample of consumer files over a period of 12 months.
The independent consultant will report its findings to ASIC.
“The national credit legislation provides important protections to consumers ensuring they are not overcharged by credit providers,” ASIC deputy chairman Peter Kell said.
“ASIC will continue to monitor the lending market to ensure compliance with these obligations and take action where credit providers have applied fees and charges in excess of the annual cost rate.”
Rescue Credit holds an Australian credit licence.
According to ASIC, MACCs, which are loans for amounts between $2,001 and $5,000 with terms between 16 days and two years, have fees limited to a one-off $400 fee and a maximum interest rate of 48 per cent, including all other fees and charges.
Charges applied in excess of these limits contravene section 32A of the National Credit Code.