The Australian Securities and Investments Commission (ASIC) has ordered a final stop for Coral Coast Distributors (Cairns) Pty Ltd on signing up customers into the government’s Centrepay credit arrangements in its Urban Rampage clothing retail stores.
ASIC discovered these arrangements to be incompatible with the financial situations of Urban Rampage consumers, who are primarily low-income Centrelink recipients residing in remote First Nations communities.
Centrepay arrangements mean the credit repayments for goods purchased are deducted from their Centrelink income before they receive their support payment. As such, this may prevent customers from acquiring living necessities.
Further, without access to other forms of credit, these customers are at risk of financial difficulties and may even be currently experiencing financial distress.
Over 10,000 customers are affected by the Centrelink agreements, with nine of Urban Rampage’s 10 stores allegedly involved in the misconduct. These stores are located in Broome, Derby, Halls Creek, and Kununurra in Western Australia; Gove/Nhulunbuy, Tennant Creek, Katherine, and Alice Springs in the Northern Territory; and Mt Isa in Queensland.
On Feb. 22, ASIC made an interim stop order preventing Coral Coast from entering new agreements to pay for goods on credit via Centrepay. The interim stop order was valid for 21 days before it was extended on March 15, while ASIC delegate Phillip Mines made the final decision.
Mr. Mines acknowledges the fact that the ban will reduce credit availability to First Nations consumers. However, he believes that the need to protect vulnerable consumers from receiving unsuitable financial products will exceed any resulting adverse effects of the order.
The ban is also the first such of its kind since design and distribution obligations (DDO) were introduced in 2021.
The stop orders were determined after ASIC received protests through its Indigenous Outreach Program and consumer networks.
“ASIC is concerned that [Coral Coast’s] Target Market Determination did not adequately detail eligibility criteria, including how the financial capacity of consumers is to be determined,” ASIC Deputy Chair Sarah Court said.
Under the DDOs administered by ASIC, Coral Coast must design and distribute credit facilities that are consistent with its consumers’ needs and financial capacities. The company is also obligated to publish a Target Market Determination for the credit facilities it offers.
Services Australia, administrators of the Centrepay program, has suspended Coral Coast’s existing credit arrangements involving Centrepay while preventing the creation of new ones.
ASIC had made several attempts to alert Services Australia about over 100 businesses with approval to use Centrepay. However, the latter did not remove them from the system when ASIC’s warnings were proclaimed.
ASIC Commissioner Alan Kirkland said this action should implore other businesses that also use Centrepay in a similarly harmful way to Indigenous Australians to reflect on their practices.
“Addressing harm impacting First Nations Australians is a key priority for ASIC and we continue to work closely with financial counsellors and advocates in regional and remote communities to understand the challenges those communities face,” Kirkland stated.
Urban Rampage to Sue ASIC for Racial Discrimination
In response, Urban Rampage’s lawyers plan to launch a legal challenge under the Racial Discrimination Act 1975 and face ASIC in the Administrative Appeals Tribunal. Moreover, Urban Rampage said that ASIC implemented the decision without consulting the customers.“We have said from day one ASIC has been acting in a racist and paternalistic way towards First Nations people, who are largely our customer base. In the remote communities we service, this looks like click and pay for whites only, no credit for black fellas,” Urban Rampage said.
“ASIC’s move is a throwback to the stolen generation. We have more than 1,000 First Nations customers who have signed a petition slamming ASIC’s ban but it refuses to listen to them and thinks they are incapable of articulating themselves.”
