- Credit Corp Group (CCP) says an internal quality assurance review found it has been overcharging interest rates to a number of customers over several years
- The bulk of the mistakes come from a zero-interest loan repayment scheme implemented by Credit Corp during the COVID-19 pandemic
- Credit Corp says while less than one per cent of customers were affected, it will remediate up to $4 million to customers it overcharged since July 1, 2015
- However, the company reaffirms its FY23 net profit guidance of between $90 million and $97 million and says it does not expect today’s news to materially impact its bottom line
- Shares in Credit Corp are trading 6.48 per cent lower today at $19.63 each at 2:30 pm AEST
Credit Corp Group (CCP) today reported an internal quality assurance review found it had been overcharging interest rates to a number of customers for several years.
The bulk of the mistakes come from a zero-interest loan repayment scheme implemented by Credit Corp during the COVID-19 pandemic, but the financial services business said it would remediate up to $4 million to customers overcharged since July 1, 2015.
The company has launched an internal investigation, which it said would take another 90 days to complete, into the extent of the issue and its proposed remediation.
The errors mostly affected customers who established flexible payment arrangements during the pandemic under which Credit Corp reduced interest rates to zero.
The company said the forbearance was supposed to be permanently applied for the term of all new repayment arrangements established during the temporary period, but due to an administrative error, contractual interest was re-applied in some cases.
Credit Corp said current indications suggested less than one per cent of customers across its purchase debt ledger were affected.
The company added that additional controls had been put into place to prevent similar administrative errors.
Credit Corp CEO Thomas Beregi said the investigation into the matter would be thorough and comprehensive.
“While it is very disappointing that the issues arose, we are devoting appropriate resources to ensure that all affected customers are identified and the full benefit of intended forbearance is provided,” Mr Beregi said.
Separate to the pandemic-related errors, Credit Corp said the Australian Securities and Investments Commission (ASIC) had flagged a historic practice by the company of accepting temporary repayment arrangements from customers until 2021.
Credit Corp said it did not believe this practice had broken any laws, but it would cooperate with ASIC’s investigation into the matter. Further, the company plans to retrospectively apply key elements of its revised policies to all temporary arrangements from July 1, 2015, resulting in customer refunds of up to $800,000.
Credit Corp reaffirmed its 2023 financial year net profit guidance of between $90 million and $97 million and said it did not expect today’s news to materially impact its bottom line.
Shares in Credit Corp were trading 6.48 per cent lower today at $19.63 each at 2:30 pm AEST.