The class action against payday lender Cash Converters by more than 35,000 mainly low-income borrowers in New South Wales has moved into its final phase, after the Federal Court approved a settlement agreement yesterday.The agreement, hammered out by class action specialist law firm Maurice Blackburn Lawyers and first announced in July, sets out the various payments for legal, professional and administrative costs as well as providing a game plan to identify and pay all borrowers entitled to refunds, even if they did not sign up to the class action.Under Federal Court rules, this type of "representative proceedings" (also known as class action) cannot be discontinued or settled without the express permission of an appropriate court. Justice Jayne Jagot, in her summing up, noted that sufficient evidence had been provided to show that what had been presented was a reasonable result, given the complexity and likely duration of litigation in the absence of an agreement.The settlement potentially covers all borrowers in NSW who took out Cash Converters short-term loans from July 2010 until the consumer lending laws changed in July 2013, with the exception of any borrowers who had specifically opted out of the action, plus a few borrowers who are still paying off qualifying loans. Cash Converters, while not admitting liability, will pay out A$23 million, including up to $3 million in legal and other professional fees. The remaining $20 million - less administrative charges of up to $1.7 million - will be distributed by way of compensation to borrowers who had been charged "deferred establishment fees", based on a flat 35 per cent of the total amount borrowed, imposed in addition to interest charges.The class action, fronted by lead plaintiff, "pensioner and grandmother" Julie Gray, alleged that these deferred fees, applied in conjunction with a commitment by borrowers to repay loans early, amounted to a device to avoid the 48 per cent interest rate cap in NSW.As part of the agreed settlement, Julie Gray will also be paid an "honorarium" in recognition of the amount of work she has had to do on her own account.Central to the success of the final outcome is an undertaking by Cash Converters to provide account details of all borrowers affected (as the loans had all been subject to direct debit arrangements). Costs of administration were estimated according to a series of assumptions as to how many borrowers could be found with reasonable ease.The plaintiff's legal representatives assured the Court that, under the agreed timetable, by the time 11 months have elapsed from the start of the process, attempts to contact all affected borrowers will have been made. Maurice Blackburn also said it would cease to act on behalf of Gray once the Court signed off on the agreement.Jagot was told Cash Converters would "find another way" to compensate borrowers still paying off loans caught by this action.