ASIC has been criticised for a deal allowing Cash Converters to refund millions of dollars worth of loans.

Cash Converters was ordered to refund about 118,000 loan, or ‘small amount credit contracts’, after an ASIC investigation found the company failed to make proper inquiries into applicants’ income and expenses, making the loans they issued “unsuitable”.

Cash Converters agreed to refund $10.8 million in fees through a remediation program overseen by an independent expert reporting to ASIC, as well as $1.35 million for 30 infringement notices from the regulator.

But the repayment program could have some flaws, as revealed in a Senate Estimates Committee hearing this week.

“As part of the agreement, the enforceable undertaking, ASIC would not take further action with the important exception in relation to debt collection practices where we have an investigation underway,” ASIC deputy chair Peter Kell said under questioning.

“It allowed us to reach an agreement in a very timely way and to focus on changing the business model and to get an independent review into the Cash Converters business.”

That means thousands of customers who took loans out in store miss out on automatic compensation.

ASIC chairman Greg Medcraft said it was more difficult to investigate the in-store loans.

“With online [loans] we had all the evidence online, exchanges between the borrower and the lender,” Mr Medcraft said.

“Whereas if you had have gone in store, basically the communication would have been verbal, it may not have been documented in the same way.”

About 55,000 customers who loaned in have to pursue their cases individually through the Ombudsman, missing out on automatic repayments.

“There's an additional source of recourse as well... through private litigation class action,” Mr Medcraft added.

Maurice Blackburn is running a class action against Cash Converters in Queensland, after a case for NSW Cash Converters customers in 2015 resulted in a settlement.

The Credit and Investments Ombudsman complaints about Cash Converters have increased after ASIC's case against it started last year.