Cash Store's A$19m penalties critical for credit industry 26 February 2015 5:47PM Bernard Kellerman The Federal Court's decision a week ago to award a record A$19 million civil penalty against The Cash Store (in liquidation) and Assistive Finance Australia for breaches of the responsible lending provisions has been defended by ASIC.The corporate regulator yesterday placed a note on its website, emphasising that this was the first case in which the new responsible lending provisions played a leading role. "This is therefore an important pronouncement ... on the conduct expected of industry participants when engaging in credit activities," ASIC said. When ASIC commenced the action in September 2013, TCS was "a large player in the payday lending industry with over 80 stores across Australia", and was funded by AFA."Given the extent of the wholesale failure of the companies to comply with their obligations under national credit law it was appropriate, as the Court's judgments make plain, for ASIC to prosecute the action," the agency stated.Although the proceedings against the companies were ultimately uncontested, the Court tested the evidence and individually reviewed 281 loan contracts, randomly selected from more than 325,000 contracts entered into during the relevant period. Out of these, the Court held that in respect of 277 contracts (or 99 per cent), TCS and AFA had breached the National Credit Act. According to ASIC, it is a detailed judgment that clearly sets a benchmark for responsible lending and systemic unconscionable conduct in financial services.