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ASIC has banned the former director of a payday lender, Peter Elfyd Llewellyn of Queensland, from engaging in credit activities for a period of 10 years.
Mr Llewellyn was banned following an investigation by ASIC into his conduct as a director of PR Finance Group Ltd (in liquidation) (PRFG) and Australian Money Exchange (in liquidation) (AMX).
ASIC found that AMX engaged in unlicensed credit activity during the period 1 July 2011 to 23 September 2013. AMX attempted to avoid the requirement to be licensed by structuring short-term loans to avoid the application of the National Credit Code. AMX charged fees on short-term loans which were in excess of the limits imposed by the National Credit Code.
ASIC also found that Mr Llewellyn was knowingly involved in AMX's unlicensed credit activity because, among other things, Mr Llewellyn participated in substantial decisions regarding business and legal issues affecting AMX. ASIC also found that Mr Llewellyn was not a fit and proper person to engage in credit activities.
“The safeguards in the National Credit Code are designed to protect vulnerable consumers. ASIC will take action against persons who deliberately seek to avoid these obligations,” ASIC deputy chairman Peter Kell said.
Mr Llewellyn has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decisions.
An ASIC statement noted that during the relevant period, AMX operated its business in Queensland and New South Wales, through branches located in Beenleigh, Caboolture, Gosford, Liverpool, Mayfield, Rockhampton, St Marys, Stones Corner and Warrawong.
The company provided short-term loans to customers in the form of a cheque. The loan fee for the loan was 5 per cent of the loan principal. AMX also charged a cheque cashing fee of 16 per cent of the loan principal.
ASIC found that the cheque cashing fee of 16 per cent of the loan principal was a fee or charge payable for a service related to the provision of credit. Accordingly the total fees and charges for short-term loans provided by AMX was 21 per cent (which exceeded the 5 per cent threshold). Therefore the National Credit Code applied to AMX and the lender was required to be licensed during the period 1 July 2011 to 23 September 2013.
In October 2013, AMX was placed into administration and in May 2015, was placed into liquidation.
[Related: Is a payday loan ever a good idea?]