ASIC has made an interim stop order preventing Coral Coast Distributors (Cairns) Pty Ltd (CCD) from having customers at its Urban Rampage retail stores enter agreements to pay for goods on credit through Centrepay deductions.
ASIC is concerned that the consumers in CCD’s target market are low income recipients of Centrelink benefits, residing in remote Indigenous communities, without access to other forms of credit. ASIC is concerned that these consumers are vulnerable, at risk of financial hardship and that many may currently be experiencing financial distress.
Consumers’ repayments to CCD for goods purchased on credit are deducted from their Centrelink income before they receive their support payment, carrying the risk that they will then be unable to meet essential living expenses. ASIC is concerned that this deferred deduction arrangement is inherently unsuitable for the consumers in CCD’s target market and does not meet their likely needs, objectives and financial situation.
ASIC Deputy Chair Sarah Court said, ‘Urban Rampage describes its target market as consumers who predominantly reside in remote Aboriginal communities, are low income recipients of Centrelink payments, do not have immediate funds to purchase household goods and do not otherwise have access to credit. ASIC is concerned that CCD’s Target Market Determination did not adequately detail eligibility criteria, including how the financial capacity of consumers is to be determined. More broadly, ASIC is concerned that this deficiency reflects CCD’s inability to ensure that this kind of credit facility is suited to the needs of consumers in its target market.’
‘ASIC continues to work closely with financial counsellors in regional and remote communities where CCD operates to understand the impact of these arrangements and the circumstances of consumers experiencing financial hardship. We are concerned such arrangements are causing vulnerable consumers serious financial harm, and ASIC is committed to taking action in these circumstances,’ Ms Court said.
The interim stop order is valid for 21 days unless revoked earlier. The order does not prevent CCD from offering alternate payment options for goods such as cash or EFTPOS. CCD will have an opportunity to make submissions before a decision is made about a final stop order.
