Cash Lending

Loans vary between $50 and $1000, with clients having one to three month to repay the loans with interest. Pointing to machinery in Cessnock, in the Hunter area. You will be subject to the same regulation as other cash creditors. Cash-N-Go said they lend cash to those who can buy it back".

Which is the Cash Shop and where does it provide credit in a sustainable way?

TCS was a major actor in the payment day loan business with over 80 shops across Australia. Australian Securities and Investments Commission (ASIC) has initiated procedures for good governance under the German Consumers Loan Act and for unindebted behaviour in connection with the sale of insurances. The ASIC had a significant federal court win and eventually received nearly $19 million in fines (the biggest ever civilian punishment received by the ASIC), but opinions are split as to what the case means for the manufacturing world.

Requests for information on client needs and goals - The Court's findings have a genuine capacity to set the standard higher on this point, as they find that the grounds for looking for a mortgage such as "personal", "cost of living" and "travel" were not enough to fully appreciate the applicant's needs and goals. As the Court pointed out, the objective must be sufficiently precise and the amount of the aid must be compatible with that objective.

It has the capability to demand a higher level of requests to the industries, especially if this level is extended to higher values / more straight line lending. Revenue and expenditure studies - The Court found that in each individual case it will be a question of the level to which further information and further studies may be needed to evaluate the consumer's ability to pay back and serve.

As far as doubts remain at this point, the court makes it clear that creditors must always ask for the revenue. Even more controversial is the fact that the Court's de facto observations on the scope of the investigations could be seen as a more detailed information base, possibly going beyond revenue and almost certainly beyond personal expenditure, than is currently the case in some sectors of the economy, when generally applicable to other kinds of loans and loans.

The Ombudsman's long-standing view that proof of a person's earnings is a prerequisite is reflected in this. The judgment, however, says little about the appropriate means of verifying this, and ASIC Regulatory Guide 209 on Credit Governance still acknowledges that these types of instruments can be useful to confirm whether it makes sense to trust the information provided by the client or whether further requests are justified.

Unreasonable behaviour through the distribution of unreasonable goods - Given the type of client portfolio and the type of personal lines assurance marketed by TCS (the Court found that the low distribution and claims ratio and the low probability that the coverage would be beneficial to the clients, in particular the significant proportion of jobless clients), it was manifestly unsuitable for the needs of most clients and the Court decided that the sales of the assurance by TCS were unreasonable.

It may be a legitimate issue whether such results suggest a more general presumption that the appropriateness of a given products for a particular client population needs to be tested before the products are marketed. ASIC's law enforcement policy - ASIC established proof of a relatively small sample of loans agreements (selected from more than 325,000 over the period), and the court found violations in relation to about 99% of them.

The ASIC has said that the case "sends a clear signal to the whole retail banking sector about the severity of such violations". Whereas the Court of First Instance has issued a small number of declarations of principles, the reasons given in the judgment are largely influenced by the specific facts of the case.

There was no defence of the case, so ASIC's views were not examined to the opposite effect, but on the other side the court did not agree to all ASIC's views. It is arguable that an adequate degree of investigation for the purposes or quantification of particular expenditure would differ in situations where the overall performance of a borrowing entity differs both in absolute value and in relation to the amount of the credit from the cases examined by the Court in a cash storehouse.

ASIC has, however, indicated that the case is "an important case of setting a good example of good governance for the retail banking community in general and for payment providers in particular", with some changes to its regulatory guide indicating a strengthening of its minimalism. The ASIC remains focused on developing lending policies that are accountable within the banking community, not just within the payment day lending community, and is continuously expanding the breadth of its research.

Therefore, all sector players should review their lending policies.