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The Latest in Consumer Credit

The Latest in Consumer Credit

Recent Cases and ASIC Actions in Consumer Credit 2018

Cases Discussed

  • Paccioco
  • Cash Converters
  • BMW
  • Channic
  • Nimble
  • Westpac
  • Motor Finance Wizard
  • Radio Rentals
 

PACCIOCCO V ANZ (HIGH COURT OF AUSTRALIA)

Maurice Blackburn’s multimillion dollar class action against the ANZ which argued that late fees were “penalties” at common law (as well as breaching other statutory provisions) and, therefore, unenforceable. Cash Converters EU The relevant contracts were those where the lender had “rebutted the presumption of hardship” which arises when the consumer has 2 or more SACC loans in the previous 90 days. ASIC alleged that Cash Converters had failed to do so and had relied too much on benchmarks rather than individual assessments of consumer expenses. BMW EU
  1. ASIC initially prosecuted BMW for some debt collection conduct =>   Fines of $306,000 + External Compliance Reviews.
  2. ECR found 98/100 contracts reviewed did not satisfy responsible lending obligations.
  3. ASIC decided not to wait for...
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Changes in loan contracts to eliminate unfair terms for small business

Following a commitment to further review their small business loan contracts, the big four banks have now agreed to specific changes with ASIC to eliminate unfair terms for their contracts from September 2017. ASIC and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) have welcomed the changes, which mean that:
  • the loan documents will not contain 'entire agreement clauses' that absolve the bank from responsibility for conduct, statements or representations they make to borrowers outside the written contract.
  • the operation of the banks' indemnification clauses will be significantly limited. For example, the banks will now not be able to require their small business customers to cover losses, costs and expenses incurred due to the fraud, negligence or wilful misconduct of the bank, its employees or a receiver appointed by the bank.
  • clauses which gave banks the power to call in a default for an unspecified negative change in the circumstances...
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ASIC Applications must be accurate

When making any applications for licences from ASIC, financial service providers must provide accurate information, particularly about qualifications. Recently, ASIC has prosecuted an applicant for making false statements in an application. The documents containing false statements submitted by a financial adviser to ASIC included a forged educational certificate and a table referring to an educational qualification that has not been obtained. The court found each of the charges proven, and placed the adviser on a good behaviour bond for a 12-month period, without recording a conviction because the adviser has pleaded guilty and cooperated with ASIC. ASIC Deputy Chairman Peter Kell said, "The issuing of charges reflects the high degree of integrity expected of people who apply for and operate under a financial services licence. It also shows that ASIC wants reputable financial advisers, who play by the rules, to be able to operate on a level playing field." Under section 1308(2) of the...
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