Cash Converters is facing a potential $40 million class action over claims it charged customers illegal levels of interest of more than 600 percent on personal loans.

The NSW Federal Court yesterday cleared the way for 40,000 people to file proceedings against Australia’s largest pawn broking service, ABC reports. Law firm Maurice Blackburn is representing the NSW customers in two class actions.

The firm claims customers were charged up to 633 percent on personal loans, ABC said.

Cash Converters denies the claim and has requested the case be thrown out.

The company argued its fees were legal and that lead plaintiff, Julie Gray, a pensioner from western Sydney, is only entitled to act on behalf of some customers, and not all NSW customers.

In the almost three years between July 1, 2010 and June 30, 2013 the interest rate cap on loans in NSW was 48 percent.

Maurice Blackburn principal Ben Slade told ABC the ruling was a victory for all class actions in Australia.

"Today’s judgment is an important result in the Cash Converters process because it makes it clear that the class action can cover all Cash Converters customers that were subjected to these exorbitant interest rates statewide, rather than limiting it to customers of the one outlet in Penrith," he said.