Regulators must act now David Wylie says the collapse of BrightHouse and others, plus an ongoing tidal wave of compensation claims, should act as a wake-up call to the regulator. It can’t sit on the fence any longer.
Rent-to-own retailer BrightHouse called in administrators earlier this year under the weight of an avalanche of compensation claims. It had been forced by the regulator to pay A$26.3m to customers who had signed-up to ‘unaffordable’ loans, and to those who had cancelled agree- ments after one down payment. The firm called in administrators after it realised this payout was not going to
draw a line under the matter, and that there would be more claims to come. Its collapse followed on from that of payday loan giant Wonga, QuickQuid, 247Moneybox, PiggyBank and WageDay Advance. What hobbled these lenders, and con- cerns others who still want to operate profitably in this space, is that unless the regulator comes up with a crite-
ria for a ‘valid claim’ - rather than its ‘anything goes’ stance - it is difficult to meaningfully plan for a viable future. How can anyone in this industry do that when you have a giant unknown liability hanging over your head? If the regulator refuses to admit that there should be a cost to making a false claim, then there is no real limit to the number that will be received by lenders. No one minds having to com-
10 | Metrics Monthly
September 2020 | AU Edition
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