ASIC rejects claims Urban Rampage ban is hurting First Nation communities

Australia’s corporate watchdog has defended itself against claims its ban on credit purchases from a retail chain that targets remote Indigenous communities is having a “disastrous impact” on First Nations customers.

The Australian Securities and Investments Commission late last week extended an interim ban on Urban Rampage, a clothing and homeware chain which operates in 10 locations across the Northern Territory, Queensland and Western Australia, from signing up customers to credit agreements using the financial tool, Centrepay.

The national corporate watchdog has defended itself against claims its ban on credit purchases from a retail chain is having a “disastrous impact” on First Nations customers.Credit: Darrian Traynor

The regulator said the retailer’s use of a national scheme, allowing people to buy essential goods and pay them off via regular deductions from Centrelink payments, could push vulnerable customers into significant debt, leaving them unable to make ends meet.

But Urban Rampage, which has previously described its target market as consumers who predominantly reside in remote Aboriginal communities and are low-income recipients of Centrelink payments, is rallying against the ban.

In a statement released on Wednesday, Urban Rampage lawyer Leon Loganathan said the temporary ban was another case of a “government effectively telling First Nations people how to live their lives”.

Loganathan said his client had received more than 80 formal complaints from First Nations customers and described an extension of the temporary ban as “disappointing.”

He said the company had not failed a Centrepay audit since registering to use the service in 2016.

“It appears this is a case of shoot first and ask questions later,” Loganathan said.

“There has been no dialogue with the people most impacted by cutting off Centrepay as a payment option. This is a very disappointing action by the regulator.”

He described the credit system as “perfectly designed to help First Nations Australians buy what they need” and said First Nations customers were upset that the retailer’s service had been terminated without any consultation with them.

But the corporate watchdog said it had investigated the issue after receiving a number of complaints from financial counsellors, who warned that their clients were presenting for emergency relief after entering CentrePay deduction arrangements with Urban Rampage, which is a trading name of parent company Coral Coast Distributors (Cairns) Ptd Ltd.

The regulator estimates more than 10,000 customers are affected. Data shows that the Urban Rampage store in Alice Springs signed up more than 5000 customers in the 12 months from December 2022 to December 2023.

“Urban Rampage has been given an opportunity to make submissions to ASIC and a further interim stop order remains in place while ASIC considers these submissions and reaches a decision about a final stop order,” an ASIC spokesperson said.

“ASIC understands the difficulties experienced by First Nations peoples when seeking credit and accessing financial services in remote communities.

However, any solution that leads to increased rates of debt and financial harm to vulnerable consumers is unacceptable.”

The regulator’s action has been backed by some First Nations consumer advocates.

Mob Strong Debt Help, an Indigenous-led service that is seeking broader reform to address ongoing misuse of Centrepay, said the extension of the temporary ban indicated the regulator was “still looking carefully at this business while preventing further harm”.

Mob Strong financial counsellor Bettina Cooper said the people assisted by the debt help group were seeing their “finite amount of income … going to multiple Centrepay deductions.”

“Centrepay has become a vehicle for financial abuse,” Cooper said.

Centrepay is a long-standing Commonwealth credit scheme provided to Centrelink customers.

It was recently at the centre of a saga involving Youpla Group schemes, formerly known as Aboriginal Community Benefit Fund, which left thousands families unable to pay for funerals.

A national probe found the funeral fund used government-run system Centrepay to debit millions of dollars from Centrelink payments.

The corporate regulator is pursuing former directors of a collapsed funeral fund that marketed insurance to Aboriginal families, over allegations they oversaw a vulnerable structure that exposed members to unaffordable premiums.

Centrepay-approved payments are deducted from Centrelink payments when they land in the customer’s bank account, locking in payment to that business before necessities like food can be purchased.

However, Loganathan said in a statement that more than 700 customers had signed a petition asking for the service to be reinstated.

“Click and pay for whites, and no credit for black fellas is how ASIC’s Centrepay stop order is being viewed by First Nations people in remote communities,” he said.

“It’s an uncomfortable truth for some, but a truth nonetheless based on the bare facts. … This stop order strips these communities of their dignity, agency and right to financial and economic autonomy.”

The regulator made the interim stop order over numerous concerns of alleged misconduct, including that the retailer “did not adequately detail eligibility criteria or detail how the financial capacity of its customers was determined”.

The 10 Urban Rampage stores in Australia are in Broome, Derby, Halls Creek, and Kununurra, in Western Australia; Nhulunbuy, Tennant Creek, Katherine and Alice Springs, in the Northern Territory; and Mt Isa in Queensland. Nine stores have been linked to the alleged misconduct.

Minister for Indigenous Australians Linda Burney and Services Australia have been contacted for comment.

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