ASIC has released its enforcement report for the period 1 January to 30 June 2016 and the details are concerning.
The report highlighted ASIC’s activities in the consumer credit arena, with one of the most significant breaches over the period related to responsible lending laws being broken by luxury car brand, BMW.
Car finance provider BMW Australia Finance Ltd (BMW Finance) paid penalties totalling $391,000 and had a condition placed on its Australian credit licence following concerns raised by ASIC.
The licence condition required BMW Finance to appoint a compliance consultant after ASIC found that it breached important consumer protection provisions relating to responsible lending and the repossession of motor vehicles
Further BMW was found to have:
a) Failed to check the financial information consumers provided or check that they had the means to repay the loans.
(b) failed to assess credit contracts it entered into with consumers as unsuitable, and entered into unsuitable credit contracts, when documentation provided by consumers showed there was insufficient income available after expenses to service monthly loan repayments; and
(c) failed in or delayed compliance with its obligations to provide customers with statutory information setting out their rights and the options available to them after a finance company repossesses a mortgaged vehicle or the consumer voluntarily returns that vehicle.
These failures by BMW Finance to comply with the requirements of the law resulted, in ASIC’s view, in customers entering into unsuitable loans and losing the benefit of important protections to reduce the impact of financial hardship.