ASIC has announced that Money3 has agreed to refund more than $100,000 to approximately 400 consumers following concerns raised by ASIC that a Money3 loan product breached consumer credit responsible lending obligations. The product ceased to be offered in March 2014.

Money3’s ‘fixed fee’ loan required only two repayments despite having a term of 16 months. Under the terms of the contract, the first repayment (generally due a week after the loan was taken out) was for a nominal amount, and the much larger second repayment was due 15 months later. This second payment usually accounted for more than 90% of the total amount repaid.

ASIC was concerned that the product was likely to be unsuitable for most of the financially vulnerable customers who obtained it as they would be unable to finance the second repayment of the loan without considerable hardship. Consumers may also have been misled into believing the terms of the loan enabled flexible repayments when the contract in fact disclosed that a large fee could be charged if the consumer asked for a variation of the repayment schedule.

The refunds will ensure current consumers have not repaid any monies above the principal amount lent and a cost recovery fee.

For the period Money3 offered the loan, it entered into 24,547 contracts. As at 29 May 2015, 1941 remain on foot.

Money3 says it agreed to the refund and reduction of fees rather than debate the issues with ASIC.