About 68,000 Queensland Cash Converters customers will soon start receiving much-needed compensation payments after the Federal Court today approved a $42.5 million settlement following a successful class action brought by Maurice Blackburn Lawyers.
The approval means class action members – who include some of Queensland's most vulnerable consumers – should start receiving compensation by late May or early June.
Australia's leading class action team at Maurice Blackburn negotiated the settlement of a class action alleging that the payday lender breached Queensland credit laws by effectively charging borrowers interest rates of more than 175 per cent per annum.
Consumer laws in Queensland that commenced in 2008 capped the maximum interest chargeable at 48 per cent per annum, inclusive of credit fees and charges under the credit contract.
The case that was put on behalf of Queensland borrowers was that the "brokerage" fee, implemented by Cash Converters to coincide with those laws, was merely a mechanism to avoid their effect, and to ensure Cash Converters obtained a greater return than the laws permitted, and was unlawful or unconscionable.
Maurice Blackburn Principal Lawyer Miranda Nagy said the Cash Converters case showed the importance of class actions in providing access to the justice to those that might otherwise be locked out.
"In the present difficult and uncertain economic environment, where so many people are facing hardship, we are really pleased to be able to successfully resolve the class action and ensure that such a large group of people will receive compensation," Ms Nagy said.
"We are grateful to the court and other parties that this matter was settled in these very trying times under very difficult circumstances.
"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.
"This is a large group of people, who borrowed very small amounts of money, for very short periods, at high interest rates. None of them could hope to have run this case to see justice served, without an effective class actions regime.
"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."