Corporate: Cash Converters jumps 33 per cent after settling class action over excessive interest rates
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When your company has to cough up $42 million, it usually is not a good day. But for Cash Converters (ASX:CCV) it means its three and a half year legal battle is over.
Cash Converters had faced accusations that it had engaged in “unconscionable conduct” by charging large interest rates on personal loans between $600 and $2000 to customers in Queensland. The limit under state consumer legislation is 48 per cent.
The company will pay $32.5 million in the next 21 days and the remainder by September 30, 2020. The payout will go to 68,000 of Cash Converters’ clients who joined the class action.
In a statement this morning, the company said it was pleased to bring the litigation to a close but stressed it came without any admission on liability.
Maurice Blackburn lawyer Miranda Nagy declared,”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”.
“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.
While $42 million may seem a lot of money for a company with a $123 million market cap to cough up, it brings to an end the legal drama. This morning shares jumped 33 per cent although they remain well below levels reached before this legal fight broke out.
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