The fallout from the Royal Commission inquiry was supposed to show that the companies involved had learned from their errors and that these issues were not to occur again. However, major lender Cash Converters is set to face additional scrutiny after revelations came to light of it once more handing out high-interest loans to some of the most vulnerable in Australian society.
Regulators have intentions of trying to reduce access to loans loaded with high interest, especially for the likes of problem gamblers, who are only likely to fall further into arrears.
The Consumer Law Action Centre (CLAC) has turned its fire toward Cash Converters, saying that it is still lending to consumers who are at risk, despite assurances to the contrary. The company claimed that it would introduce new practices to reduce the chances of this happening.
Back in 2016, the company faced enforced undertaking (EU) that made it pay back $10.8m to customers while also receiving a $1.35m fine. Although this caused some difficult PR for Cash Converters and risked affecting its reputation over the long term, CLAC has revealed fresh examples of what it deems to be malpractice.
Following the 2016 inquiry, Cash Converters admitted its failings and said that it would be introducing system changes so that it could better see the incomings and outgoings of each of its customers. It claimed that it would make better decisions on whether it should hand out certain loans.
The Australian Senate has been holding a hearing on how those struggling with their finances are receiving certain financial services and credit offers. It is now learning that Cash Converters may not have sufficiently altered its systems to deal with the scale of the problem.
One example showed that a customer was able to take out 20 different loans over a period of 12 months, and at one point had eight loans open with the lender at a time. This suggests that a responsible pattern of lending was not taking place.
Another time, Cash Converters gave a $1200 loan to someone known to have problems with gambling, despite the customer already having three existing loans with the company.
Yet another example shown to the senate involved a customer who had managed to secure a loan while not putting proper payment expenditures on file, including childcare costs and payments to creditors. As a result, she received access to more credit than she was capable of paying back each month.
In a final instance of how Cash Converters was able to hand out many loans without considering what had happened to previous ones, a customer received 30 payday loans in just four years. The client also kept receiving these loans after defaulting on previous ones.
Cash Converters Interim Chief Executive Sam Budiselik faced questions from Labor Senator Jenny McAllister. He said that he believed most of these cases were unfortunate outliers and that only 10% of customers had more than one loan at any one time. He also noted that he could only comment on individual cases once he had the chance to investigate them first.