Last week no win no fee Lawyer Maurice Blackburn announced a potential class action against Cash Converters International Limited (CCV) in relation to fees charged on personal loans and pay day lending transactions in NSW between 1 July 2010 and 30 June 2013. The company came out strongly in an ASX release rejecting the claim noting that it will be defended
Maurice Blackburn lodged two statements of claim on behalf of one individual with the Federal Court of Australia on 10 October 2013, the claims related to CCV’s personal loan and cash advance products.
In response to the claim CCV released a statement to the ASX, the key points of their statement being:
- The first management had heard of this issues was Tuesday, 8th October 2013
- CCV are confident the fees charged on the loans which are the focus of the claim were properly levied and lawful
- The amount of total fees mooted in Maurice Blackburn’s announcement appears ‘vastly inflated’ given NSW is CCV’s smallest state by number of stores (18 stores) and the action relates only to lending within a three year period
- The company believes the claim is based on a flawed proposition and will be defended.
A copy of CCVs response can be found on the company’s website here or is available on www.asx.com.au.
CCV’s share priced dropped initially on the reports of the class action, however the company’s share price regained most of this fall following the release of the company’s response.
We remain comfortable with CCV’s credit story and believe management’s strong response to the claim (and the subsequent reaction of the equity market where earlier inter-day losses were largely reversed) is a good indication of the merit of the quantum of the claim which was initially publicised.