Westpac is the main provider for payday loan lender Cash Converter

29 October 2013 - Which Way To Pay

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Westpac emerges as significant funder for payday loans

It has emerged that Westpac is the main provider of most of the funding that allows cash converters to lend small amounts of money at very high interest rates. It has been reported that Westpac recently brokered a two-year facility to provide the payday loan lender with $60 million in funding via a “securitisation warehouse facility” secured against Cash Converters.

Cash Converters charging excessive interest rates on personal loans

Information of the funding agreement follow Cash Converters being attacked last week with a $40 million class action in New South Wales amid claims it had been charging extortionate interest rates on personal loans. Cash Converters have said they will defend the class action, stating that the loans in question were not unlawful. A Westpac spokesman declined to comment on the class action but said the bank knew that Cash Converters' business involved payday lending. They continued to say “with any customer that we lend to, we have processes to ensure that they remain compliant with all laws and regulations . . . we conduct rigorous due diligence and work closely with our customers as a matter of practice."

Payday loan industry hard to escape from

Last week, the Consumer Action Law Centre welcomed Maurice Blackburn’s class action against Cash Converters, Australia’s biggest payday loan lender, stating it would “shine a light on an industry where people often fall into cycles of debt that are difficult to escape from.” "The desperately sad thing is that pay-day loans are generally given to people on very low incomes, the very people who can least afford to be paying a premium for credit," Consumer Action chief executive Gerard Brody said.

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