Perth-based Cash Converters International has made a $650,000 settlement payment in relation to concerns over its debt collection practices, as the company transitions the process to a specialist third party.
Perth-based Cash Converters International has made a $650,000 settlement payment in relation to concerns over its debt collection practices, as the company transitions the process to a specialist third party.
The Australian Securities and Investment Commission found that the company’s personal finance division had systematically failed to meet regulatory guidelines on debt collection, including by too frequently contacting consumers.
“Asic found that as a result of poor internal controls and policies Cash Converters routinely breached regulatory guide debt collection guideline: for collectors and creditors, which recommends that consumers be contacted regarding a debt not more than three times per week or 10 times per month,” the corporate watchdog said.
“Cash Converters also provided incorrect information to consumer credit reporting agency Equifax.
“This may have resulted in up to 38,500 customers being reported with inaccurate amounts owing over a one-month period.”
Queensland-based Safrock Financial Corporation, a related company to Cash Convertors, was responsible for providing the incorrect information to Equifax.
The credit listings indicated the total amount of the debt owing by consumers, rather than the outstanding balance.
In response to Asic’s concerns, Cash Converters has agreed to pay $650,000 to National Debt Helpline as a community benefit payment.
The company is also in the process of outsourcing all debt collection work to a specialist third party debt collector.
The company said this would be completed by the end of the financial year.
Chief executive Mark Reid said the company was pleased to finalise the issue with Asic.
“Moving forward we continue to look at opportunities to be a leader in compliance in the industry, having undertaken a number of steps as part of our management review including the appointment of debt collections specialist, Collection House in 2016” he said.
Aisc deputy chair Peter Kell said consumers expect to be treated fairly.
“Asic expects all financial service providers to have appropriate systems and controls in place to ensure that debt collection practices are consistent with the guidelines,” he said
“It is also critical that licensees ensure that credit information provided to credit bureaus is accurate.”
Cash Converters said it was not aware of any further Asic investigations and confirmed its financial year guidance remained on track.
Shares in Cash Converters were up 5.7 per cent at 37 cents each at 330pm AEDT.
