New Queensland Cash Converters class action launched today

30 July 2015
A new Queensland class action has been filed against Australia’s biggest payday lender Cash Converters, over fresh claims it imposed charges exceeding the legal limits upon tens of thousands of financially struggling Queenslanders.

Miranda Nagy, Special Counsel at Australia’s leading class action law firm Maurice Blackburn Lawyers, says that despite laws in Queensland capping interest rates at 48 per cent per annum on consumer credit contracts, Cash Converters employed a business model that charged borrowers hefty brokerage fees and sent the actual interest rate skyrocketing to 160 per cent per annum.

Ms Nagy says that from 2009 to mid-2013, Queenslanders were required to appoint a broker and pay a substantial fee in order to access credit from Cash Converters lenders – despite the fact that Cash Converters offered loans in other states in Australia without charging brokerage fees. The fees amounted to over a third of the principal sought, or $210 on a $600 loan. 

“After we filed our NSW actions against Cash Converters, Queensland borrowers got in touch and our investigation of their claims showed significant breaches of Queensland’s interest rate cap also,” Ms Nagy said.

“We will allege that when lending laws in Queensland changed in mid-2008, Cash Converters contrived to avoid the interest rate cap, introducing brokerage fees immediately after Queensland regulators rejected Cash Converters’ initial attempt to avoid the new laws by seeking to channel all consumer lending through their pawn-broking business.

“The practice was deliberate and systemic. It resulted in vulnerable people incurring massive additional fees and interest, in contravention of the very laws that were designed to bring down the cost of credit.

“Short-term loans are meant to be just that, short-term. But the reality is that excessive fees and interest can force borrowers to borrow again and again, and their debt can easily spiral out of control.”

Ms Nagy says that in 2011 before a Federal Parliamentary committee, Cash Converters admitted to having in place mechanisms to ensure they receive a greater return than the 48 per cent annualised cap imposed on them.

The class action seeks to obtain refunds of all brokerage fees paid by an estimated 30,000 Queensland borrowers in the period from 30 July 2009 until 30 June 2013 – estimated to amount up to $30 million.

Sean Lynch is a disability pensioner from Queensland who is heading the class action as the lead plaintiff. 

“I went to Cash Converters because like a lot of others doing it tough, I needed some help. What I ended up with was anything but helpful, the fee was huge and I ended up having to borrow a lot more to cover it,” Mr Lynch said.

“When times are already tough, people like me need good advice and help, we don’t need things made harder.”

Ms Nagy says a class action is the only hope these people have of redress.

“The class actions regime gives people an equality of arms through strength in numbers, meaning that big companies can’t just win by attrition, which is something to be grateful for in cases like this,” she said.

“There is no way individuals like Sean Lynch could take on a well-resourced, ASX-listed company like Cash Converters on their own, but they can stand up to corporate wrongdoing like this through an effective class actions regime, so it’s an important safety net to have.”

People wanting more information or wanting to register their details can do so at

The case in brief:

Under Queensland law from 31 July 2008 up until 30 June 2013, the maximum annual interest rate that could be charged on credit contracts, including all fees and charges, was 48 per cent. This case argues that people such as lead applicant Sean Lynch were required to appoint a broker (that was a Cash Converters franchisee or related company) in order to access Cash Converters personal loans, which added an additional fee of 35 per cent of the loan amount.

The case will argue that this was a mechanism the payday lender used in order to charge more than the legal limit of 48 per cent interest and that the brokerage fee was required to be included in the interest calculation, which resulted in the company charging an effective annual interest rate of around 160 per cent, well in excess of the legal limits at the time.  The case will also argue that the charging of brokerage was unconscionable because the service provided by the broker was illusory.

For more information, go to


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