The decision in ASIC v The Cash Store (in
liquidation)  FCA 926 (Cash Store case) primarily
focused on the responsible lending obligations of payday lender,
the Cash Store under the National Consumer Credit Protection
Act 2009. To view the Federal Court decision
Other matters were also decided in the Cash Store case including
those in relation to an allegation that the Cash Store had engaged
in unconscionable conduct in contravention of section 12CB of the
Australian Securities and Investments Commission Act 2001
(ASIC Act) in selling consumer credit insurance (CCI) to customers
who took out payday loans.
In the decision, His Honour Justice Davies was scathing of the
practices of the Cash Store in selling CCI. At paragraph 94 of the
judgement he stated:
"I accept ASIC's submission that CCI was unlikely
to be of any use to customers for a payday loan and certainly
useless for those who were unemployed, a fact that must have been
known to TCS. TCS collected over $2 million from customers in
insurance premiums during the period when it sold CCI and paid out
claims worth about $25,000.
...The CCI was almost invariably inappropriate to offer to
payday lending customers because it was very unlikely to be of any
use to them. The terms of CCI were such that the insurance was
self-evidently unsuited to needs of most customers and were most
unlikely ever to confer a benefit. I am satisfied that TCS
contravened section 12CB of the ASIC Act in relation to the selling
of the CCI to its customers".
ASIC, in its
media release 15-044 MR, announced that Allianz Australian
Insurance Ltd (Allianz) had agreed to refund
consumers $400,016 in consumer credit insurance premiums received
by Allianz between the periods of August 2010 and March 2012 in
relation to the Cash Store business.
In that media release, ASIC refers to the fact that:
between August 2010 and March 2012 the Cash Store sold CCI to
these customers paid $2,278,404 in premiums for cover; and
only 43 claims were paid to consumers, totalling only
The fact that many policies of CCI were sold to borrowers who
were not working and therefore by definition unable to claim
unemployment cover, is a matter the court regarded most
The sale of products through third parties potentially creates a
reputational risk for businesses and highlights the need for
adequate supervision of third parties and their selling
ASIC noted in conclusion that Allianz had co-operated with ASIC
to resolve concerns quickly, and provided refunds to consumers,
which is to be expected given a company of Allianz's high
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The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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