Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Car financier found to have broken credit law

scales justice ta

scales justice ta
Malavika Santhebennur 3 minute read

A used-car financier has been found to have failed to comply with the law after providing high-cost credit to consumers.

The Federal Court of Australia has found that Queensland-headquartered Rent 2 Own Cars Australia Pty Ltd (R2O Cars) failed to comply with the National Consumer Credit Protection (NCCP) Act 2009, including by charging some consumers more than the allowed maximum interest rate of 48 per cent per annum when purchasing cars.

In 2018, the company, which has offices across Queensland, NSW, South Australia and Western Australia, was accused of gouging franchisees in a number of states across Australia that used the company to purchase used vehicles under a hire-to-purchase style contract.

The Australian Securities and Investments Commission (ASIC) had accused R2O Cars of using calculators that incorrectly determined weekly repayment amounts, resulting in many of the businesses and their employees paying more than the maximum 48 per cent annual cost rate.

ASIC also alleged that R2O Cars failed to disclose the annual percentage rate it charged or the method used to calculate interest charges, as required under the NCCP Act.

ASIC began civil penalty proceedings against R2O Cars and its two directors, Paul Green and Timothy Roberts, in August 2018. The trial was heard on 29 and 30 July and 1 August 2019 before His Honour Justice Greenwood.

R2O Cars provided credit for the purchase of used cars to customers, including some vulnerable customers.

The Federal Court action covered 142 hire-to-purchase contracts entered into between 1 March and 6 September 2017, and 90 hire-to-purchase contracts entered into between 25 May and 18 June 2018.


On 11 September, the court declared that:

  • In 140 contracts, R2O Cars had breached the price cap of the credit act by charging consumers an interest rate of more than 48 per cent per annum, and in some instances, up to 77 per cent per annum; and
  • In 177 contracts, R2O Cars had misled consumers by understating the cost of credit and by failing to calculate the interest rate as required by the NCCP Act.

ASIC has also successfully obtained injunctions restraining R2O Cars and its directors from engaging in contraventions of the NCCP Act and ASIC Act, and engaging in a credit activity for a particular period.

The court also declared that Mr Green and Mr Roberts were involved in some of the company’s conduct, which makes them personally liable for civil penalty orders.

Mr Roberts did not contest ASIC’s case or defend the proceedings at the trial.

In his judgement, Justice Greenwood found that Mr Green’s conduct illustrated that he had failed to understand the obligations imposed upon R2O Cars and did so with “eyes tightly closed”, even when he was put on notice by ASIC about concerns about the company’s compliance with the credit code.


Commenting on the Federal Court’s decision, ASIC commissioner Sean Hughes said: “R2O Cars engaged in misconduct by charging excessive interest and by misleading consumers about the true cost of the credit contract.”

“ASIC considers it important that we act to deter this type of misconduct through court action, as well as protect consumers from predatory behaviour.”

ASIC said the matter will be listed for a further hearing at a later date to determine the penalty amount and duration of the injunctions to be imposed on R2O Cars and the two directors.

[Related: Brokers charged for forgery, misleading statements]

Car financier found to have broken credit law
scales justice ta
TheAdviser logo
scales justice ta
Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.


more from the adviser
handshake 2 Major bank announces new CEO, consumer

A big four bank has appointed a new chief executive for its consu...

digital money ta Brokerage launches insurance quote function

The major brokerage has integrated an indicative quote function w...

bank of mum and dad NAB extends COVID-19 IO loan measure

The major bank has announced a range of changes to its loan polic...