Australian Securities and Investments Commission (ASIC) research finds MyPayNow founder and chairman Shane Powe was previously a director of Sunshine Loans, a payday lender that in 2009 agreed to repay clients $ 684,977 after billing them above a cap limiting rates, fees and charges to 48 percent per year.
In 2014, ASIC discovered that Sunshine Loans was abusing the small loan provisions. In 2014, Sunshine Loans agreed to stop using business models that ASIC said deliberately sought to avoid small loan requirements.
Shane Powe is Bronson Powe’s father and both declined to comment on the Susnhine Loans connection.
“I was not of legal age at the time,” said Bronson Powe.
Gabriel Bernarde, an analyst at short seller Viceroy Research, has been tracking MyPayNow for the past several months and said the company looks like a payday lender.
“Our research suggests there is no credit check, limited identity checks, no contact with the employer,” he said. “There appears to be no Know Your Customer or fitness for purpose check by MyPayNow. There are no checks adapted to the use. It’s hard to see the service as anything other than a payday lender.
However, Bronson Powe said MyPayNow is different from a payday lender because it only ever charges a flat 5 percent fee on the money advanced.
“There are no late fees, missed payments or other associated fees,” he said. “The amount MyPayNow advances is directly related to the amount of income a consumer earns. The amount we are advancing is capped at a maximum of 25% of consumers’ net income to reduce any risk of a debt spiral. “
Ms Temple said regulations have not caught up with the wave of new businesses in the space and called for reforms to ensure new services are accommodated within existing frameworks.
“We would like to see these payday advance credit providers regulated under responsible lending laws, which would mean that ASIC and they would also be members of AFCA [the Australian Financial Complaints Authority], “she said.” Right now, if you had a problem with MyPayNow, the only option would be to go to court or court. “
The Financial Rights Legal Center also monitored MyPayNow, and Policy Officer Julia Davis warned that the interest rates charged by MyPayNow were “extraordinary.”
“It’s up there with payday loans,” she said. “These guys mean they’re not sharks, but anyone would say a loan with 200% interest is outrageous, it’s shark territory.”
She said regulation of the sector was necessary.
“Anyone who sets up a business that falls through the cracks of all of our responsible lending laws is doing it on purpose, they call it innovation but they are avoiding regulation and just taking advantage of a loophole,” Ms. Davis said.