Loss-making payday lender Cash Store disclosed last week that it is struggling to meet its financial commitments and yesterday it got into trouble with the consumer credit regulator over its lending practices. The Australian Securities and Investments Commission said it had launched legal proceedings against lending businesses operated by Cash Store Australia Holdings, seeking financial penalties for breaches of the consumer credit law. In proceedings filed in the Federal Court, ASIC claimed that Cash Store had breached its responsible lending obligations and engaged in unconscionable conduct. ASIC claimed that Cash Store and an associated company, Assistive Finance Australia, provided unaffordable loans to a large number of their customers who were on low incomes or were recipients of Centrelink benefits. It also claimed that Cash Store sold insurance in relation to these loans when it was unlikely the customers would ever be in a position to make a claim on that insurance. Cash Store Australia Holdings is listed on Toronto's TSX Venture Exchange. Last week it issued a statement to the exchange saying its operating subsidiary would not be able to make payments to a lender because the company had been unable to raise the necessary funding. The statement said its inability to raise funds would "materially impact continuing operations" and would affect its ability to meet its obligations. Over the past year, the company has reported a series of quarterly losses. It has closed stores, and between March and April last year it was forced to stop selling loans. In July, it lost its chief executive. The company has a network of 61 branches throughout Australia. Cash Store has blamed regulatory change in the short-term lending sector for some of its problems. Regulatory changes affecting the short-term lending market include new responsible lending rules, which require a much more thorough examination of the borrower's financial situation, and caps on interest charges.