Cash Converters says Queensland class action 'deficient'

A class action launched a month ago, alleging breaches of consumer finance law by Cash Converters Personal Finance in Queensland, continued in the Federal Court yesterday.

Maurice Blackburn lawyers are seeking up to A$30 million on behalf of 30,000 Queenslanders who took out personal loans between 2009 and 2013. They allege that, in order to bypass the 48 per cent annual interest rate cap, Cash Converters forced borrowers to pay an unnecessary "brokerage fee" to a related company.

This cap was effective under both the previous Queensland consumer finance code and the National Consumer Credit Protection Act, which came into force from mid-2010.

Lawyers for Cash Converters argued in Court that the pleading filed by Maurice Blackburn was "deficient" as it did not identify why the lead litigant, who first took out a loan after July 2010, was relying on provisions of the previous state-based code which was supposed to have been repealed when the NCCP Act came into existence.

The litigants' lawyer countered that the new Act "brings back to life" the former Queensland Code by referring to definitions and previsions under the old Code, so just one model litigant was required to establish the validity of their case.

The Court ordered the solicitors on both sides to talk to each other to fully understand the issues at stake and to then file documents and supporting information ahead of their next court hearing, likely to be in early November.