Court clears way for Cash Converters customers’ compo
12 October 2015
More than 35,000 Cash Converters borrowers in New South Wales will share in a $23 million payout from Australia’s biggest payday lender, after the Federal Court today approved the settlement secured by class action specialists Maurice Blackburn Lawyers.
Special Counsel at Maurice Blackburn, Miranda Nagy, said the Federal Court had vindicated the fight that the firm and lead plaintiff Julie Gray took up to the lending giant on behalf of vulnerable people who were charged up to 633 per cent interest on short-term loans.
“The money that will be returned to our clients as a result of this case will make an extraordinary difference to their lives and wellbeing, so it’s extremely satisfying to be able to have that positive impact on people,” Ms Nagy said.
“Since the in-principle settlement in June the Maurice Blackburn office has been flooded with support and thanks from those affected, both to the legal team and to Julie.
“We’ve had many people going out of their way to thank us by explaining the very real difference it will make to their daily lives. Some have told us they will put it towards school uniforms and excursions for their kids, for others they tell us it will get them access to vital health needs such as getting their teeth fixed or an eye operation. These are important and meaningful benefits for some very vulnerable people.
“The Court’s approval of the settlement is a welcome and significant victory for thousands of people who would have had no real access to justice otherwise.”
Ms Nagy said the case was a prime example of how class actions can help the most vulnerable get real access to justice.
“None of these people, on their own, could have taken on Cash Converters. It is because we have an efficient and effective class actions regime that they are able to join forces and stand up to large organisations to change corporate behaviour for the better,” she said.
The case claimed that the company avoided a 48 per cent interest rate cap in NSW by having borrowers sign a separate document that committed them to repaying their loans early, thereby incurring a hefty “deferred establishment fee”.
The fee, when included in calculating annual interest rates, meant actual interest rates soared from 48 to 633 per cent per annum on one-month cash advance loans and 145 per cent per annum on seven-month loans. The settlement is without admission of liability.