Checkmate Research, page-57

It appears the interest rate cap for MAINSTREAM lending in Australia is 48%pa.
SACC lending has a cap of 68%pa which is much higher. (20% upfront fee plus 4% per month of loan amount.)

CCP are marketing to credit impaired consumers who would usually be in the SACC segment, however they are doing so within the general interest rate cap. So the argument is the product isn't a payday loan.

One product, WW, charges 48%pa. Another product, Nimble, chareges 68%pa. Same type of customer, 2 different products.

The ethics of something like this is subjective. On one hand, watching bank ads for BEST PRICE mortgages and personal loans and then comparing it to WW appears criminal.

Though, think about the qualitive reasons for the need for costly lending no doc lending. There is a demand for these products and despite them being expensive, people have a borrowing option that they otherwise would not.

However, even after this lets look at what CCP shareholders are actually making of this 48%pa product. In the CCP half yearly presentation the ROC being targeted is 12%pa from the loan book. Wait, isn't the headline rate 48%pa?

CCP write off about 20% of a loan upfront because of the overall credit risk of borrowers. Already the loan book net interest margin is at about 28%pa. Then there are overheads, finance and tax to pay. Hence the overall ROC CCP makes is around 12%pa at this time.

A Nimple loan book with a 68%pa rate and similar bad debt charge, similar customers, is clearly going to be far more profitable. This is even with the higher funding costs.

Basically, WW takes on risky customers who would not normally but able to get a loan. And seeks to make a respectable low double digit return on the capital it employs for the trouble. I don't think this is criminal or unethical.