Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liquidation) (No 2)

The Australian Securities and Investments Commission (ASIC) brought proceedings against The Cash Store Pty Ltd (in liquidation) and Australian Finance Alliance Limited (in liquidation) for contraventions of the National Consumer Credit Protection Act 2009 and the Australian Securities and Investments Commission Act 2001. The proceedings concern the payday lending activities of the companies, particularly regarding compliance with responsible lending obligations and the sale of consumer credit insurance. The primary issues before the Court were determining the appropriate penalties for the identified contraventions and whether the findings from a sample of 281 credit contracts could be extrapolated to the remaining 325,756 contracts.

The Court, considering the systemic and gross failures in compliance by the respondents, acknowledged that the contraventions were widespread and deliberate. It accepted ASIC's argument that the findings from the sample could reasonably be applied to the remaining contracts, supported by statistical evidence. The Court found that Barbaro v The Queen did not preclude consideration of the regulator's submissions in civil penalty proceedings, as confirmed in subsequent cases. Neither respondent participated in the penalty hearing due to liquidation or failure to serve.

In setting the penalties, the Court considered the nature and extent of the contraventions, the circumstances in which they occurred, and the respondents' previous conduct. The Court imposed a maximum penalty on The Cash Store for the sale of consumer credit insurance and significant penalties for both companies for breaches of responsible lending obligations. The penalties were calculated based on the scale of the contraventions and the potential harm caused.

The Court's final orders included a penalty of $1,100,000 for The Cash Store for the sale of consumer credit insurance, and a total penalty of $10,725,000 for The Cash Store and $7,150,000 for Australian Finance Alliance for breaches of responsible lending obligations. Additionally, Australian Finance Alliance was ordered to pay ASIC's costs of the proceeding.