The non-bank lender has received a hefty sanction after the Federal Court found that key checks on vulnerable borrowers fell significantly short.
The Federal Court has ordered Money3 Loans, a car‑finance specialist owned by ASX‑listed Solvar, to pay $1.55 million in penalties after finding it had breached responsible lending obligations on five loans written between May 2019 and February 2021.
ASIC’s case centred on Money3’s handling of customer living‑expense information and, in one file, whether it properly explored what the borrowers wanted from the loan.
The court found that, despite holding bank‑statement transaction data, Money3 failed to make reasonable inquiries about or verify each borrower’s expenses for the five loans and, in one instance, did not adequately inquire into the borrower’s requirements and objectives.
Introducing the outcome, ASIC chair Joe Longo said the penalty had been calibrated to the court’s actual findings against the lender.
“This penalty reflects the contraventions the Court found in relation to Money3’s misconduct,” he said.
Longo also used the decision to underline ASIC’s willingness to persist with complex responsible lending litigation where consumer harm was alleged.
He said that “responsible lending cases like this one are challenging but important to take on, given the seriousness of the allegations raised by consumer advocates and the alleged impacts on individuals involved”.
Court focuses on deterrence
Although the breaches relate to a small number of contracts, Justice McElwaine made clear the court viewed the failings as materially undermining the regime.
“These matters justify significant pecuniary penalties as a specific deterrent to Money3 to ensure that they are not repeated, but also generally so that all licensees understand the importance of the inquiry and verification steps,” he said.
Justice McElwaine went further, characterising the lapses as cutting across the core purpose of responsible lending obligations for licensees.
“The failures were serious and they undermine the very purpose of the licensee responsible lending obligations,” he said.
Solvar positions governance uplift
In an ASX statement acknowledging the judgment, Solvar CEO and managing director Scott Baldwin said the group accepted the court’s decision and framed the matter as a legacy issue from 2019–21.
“Solvar respects the decision of the Federal Court,” he said.
Baldwin stressed that Money3 had since moved to tighten its controls, highlighting changes that went beyond the specific files considered in the proceedings.
“Since the period in question Money3 has invested further in governance, complaints, hardship and underwriting practices lifting group capabilities and setting a stronger foundation from which to grow,” he said.
He also sought to re‑anchor Money3’s role in the credit ecosystem, pointing to its focus on customers who may struggle to access mainstream finance.
“Money3 remains committed to providing finance for under serviced consumers typically enabling them access to a used vehicle improving their ability to participate in society,” Baldwin said.
The court has yet to determine costs, and ASIC’s bid for a compliance order was refused, but Money3 must pay the civil penalty to the Commonwealth within 14 days.
[Related: ASIC loses majority of responsible lending claims against Money3]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
