21/10/2019 - 10:57

Cashies to pay $43m to settle class action

21/10/2019 - 10:57

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Investors have welcomed an agreement by Cash Converters International to pay $42.5 million to settle a class action in Queensland.

Cashies to pay $43m to settle class action
Brendan White is the CEO of Cash Converters.

Investors have welcomed an agreement by Cash Converters International to pay $42.5 million to settle a class action in Queensland.

The company said it would pay members of the class action $32.5 million within 21 days of execution of the deed of settlement and the final $10 million by end of September next year 2020, with no admission of liability as part of the deal.

It was alleged Cash Converters engaged in "unconscionable conduct" by charging annual interest rates on around 68,000 personal loans in excess of 175 per cent from between 2009 and 2013.

Investors were anticipating a worse deal for the company, as shares in the Perth-based Cash Converters were up 30 per cent to trade at 20 cents each at 1.30pm AEDT.

Maurice Blackburn Lawyers had alleged the company breached the state's credit laws by effectively charging borrowers interest rates of more than 175 per cent per year.

It was argued Cash Converters breached Queensland consumer laws, which impose a cap of 48 per cent annually for consumer credit loans.

Maurice Blackburn principal Miranda Nagy said lower income were those most affected by the personal loan scheme.

"More than 60 per cent of the people involved in this case have annual incomes of somewhere between $12,000 and $35,999, so these type of loans are often a last resort and the type of compensation we have secured for them today is extremely meaningful," Ms Nagy said.

“These class actions are prime examples of how the class action regime works to promote access to justice for the most disadvantaged in our community.”

In July, Cash Converters International said it expected a loss of between $2 million and $4 million for the 2019 financial year, largely due to class action settlement costs.

It recorded a net profit of $9.3 million for the 2018 financial year.

In March, former Bank of Queensland executive Brendan White started as its chief executive.

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