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.
Background
CCD operates 10 Urban Rampage stores in regional and remote locations across Western Australia, the Northern Territory and Queensland, selling household items.
The nature of CCD’s business and its reliance on deferred deduction arrangements means that it must comply with the design and distribution obligations (DDOs) administered by ASIC. The DDOs require firms to design financial products, including credit facilities, that meet the needs of consumers, and to distribute those products in a targeted manner. CCD is required to publish a Target Market Determination (TMD) for the credit facility it offers to customers, which involves repayment for goods purchased at its stores by deductions from customers’ Centrepay accounts.
ASIC has received complaints through consumer networks and engagements with ASIC’s Indigenous Outreach Program, including of CCD customers experiencing financial hardship and presenting for emergency relief after entering Centrepay deduction arrangements.
ASIC's Indigenous Outreach Program works across ASIC to provide advice, insights and support to ensure ASIC’s engagement with First Nations peoples is culturally appropriate and sensitive. The team works with a range of organisations and government agencies, including the financial services industry, to influence system change and drive positive financial outcomes for First Nations peoples.
First Nations consumers can contact ASIC’s Indigenous Outreach Program on our dedicated Indigenous Helpline on 1300 365 957.
Mob Strong Debt Helpline on 1800 808 488 can assist if you are experiencing financial hardship.
ASIC’s Moneysmart website has further information on managing money for First Nations consumers.
Editor's Note:
During a hearing on 15 March 2024, ASIC made a further interim stop order prohibiting the same conduct covered by the initial interim order.
ASIC will further consider submissions made by CCD during the hearing and reach a decision in due course.
Editor's Note 2:
On 26 April 2024, ASIC made a final stop order – 24-084MR.
Editor's Note 3:
On 30 April, Coral Coast applied to the AAT for review of ASIC’s decision to issue the final stop order. Coral Coast also applied for a stay of the final stop order decision.
The stay application is listed for a hearing on 3 June 2024.