Katherine clothing store Indy-C hit with 21-day ban over allegations it allowing vulnerable customers to use Centrelink credit scheme

A store has been accused of signing vulnerable Territorians up to a credit repayment scheme without confirming if it would push them into dire financial hardship.

Katherine clothing store Indy C has been hit with a temporary ban by the Australian Securities and Investments Commission stopping the business from allowing consumers to pay for goods on credit through Centrepay deductions.

The Australian business watchdog has temporarily banned a Katherine clothing store from using a Centrelink repayment scheme, alleging the business was putting vulnerable Territorians at risk.

The Australian Securities and Investments Commission announced on Tuesday it had made an interim 21-day stop order against Indy-C-Fashion Accessories Pty Ltd, a clothing store at Katherine Terrace, after it allegedly used a repayment scheme that endangered low-income customers on Centrelink.

ASIC alleged Indy-C was allowing customers to pay for items — including clothing, funeral attire, footwear, bedding and accessories— on credit through Centrepay deductions without ensuring the deferred payment system wouldn’t push them into further hardship.

It said through this arrangement customer repayments to Indy-C for clothing and homewares were deducted from their Centrelink income before they received their support payment.

“This carries the risk that they will then be unable to meet essential living expenses,” it said.

“ASIC is concerned that Indy-C does not assess consumers’ needs, objectives, or financial capacity before the credit facility is distributed to them.”

ASIC said it was concerned financially vulnerable people from Katherine and surrounding remote communities entered into these credit arrangements due to a lack of other alternatives, and further leading to “increased risk of financial hardship”.

“Protecting First Nations consumers from harm and misconduct remains an ASIC priority,” it said.

ASIC said the clothing company’s reliance on this Centrepay credit arrangement meant it was obligated to comply with its design and distribution obligations, namely to design financial products that met the needs of its customers through a Target Market Determination.

It alleged the Katherine store did not set up a TMD, even after it was notified of this requirement in December.

The business watchdog said it was working with financial counsellors to understand the breadth of this issue and the “significant harm as a consequence of Indy-C”.

The 21-day order bars the fashion store from allowing customers to buy items using the Centrelink credit scheme, but does not prevent Indy-C from continuing to offer alternate payment options for goods such as cash or eftpos.

Indy-C will have an opportunity to make submissions before a decision is made about a final stop order.

The Katherine business owner was contacted, but said she was not able to comment on the matter.

Originally published as Katherine clothing store Indy-C hit with 21-day ban over allegations it allowing vulnerable customers to use Centrelink credit scheme