The financial services regulator has commenced proceedings for the recovery of unpaid fines and cost orders against a car lender and for the bankruptcy of its director.
In April 2017, the Federal Court fined Channic Pty Ltd (Channic), Cash Brokers Pty Ltd (Cash Brokers) and the director of those companies, Mr Colin William Hulbert, a total of $776,000 and ordered the payment of ASIC’s costs of $420,000 after finding that the companies breached the National Credit Act, engaged in unconscionable conduct and entered into unjust transactions.
Channic, Cash Brokers and Mr Hulbert operated a used car dealership in Cairns.
ASIC brought civil penalty proceedings against the companies after the Indigenous Consumer Assistance Network (ICAN) reported that Channic and Cash Brokers were dealing unjustly with vulnerable Indigenous consumers from the remote community of Yarrabah, near Cairns.
Its investigation found that Cash Brokers was assisting consumers to obtain loans from Channic at an interest rate of 48 per cent to purchase vehicles from a related entity. This was in addition to charging brokerage fees of up to $990.
Meanwhile, Channic did not assess whether the loans were suited to the consumers’ requirements.
Aside from the fines and cost orders, the court also awarded a total of $47,699 in compensation to affected consumers, which also remains unpaid.
As such, ASIC has now applied to the Supreme Court of Queensland and the Federal Circuit Court of Australia for orders to wind up Channic and Cash Brokers and to bankrupt Mr Hulbert as a result of the non-payment of these fines and costs.
The bankruptcy proceedings will be heard in the Federal Court of Australia on 15 February 2018 and the winding-up applications will be heard in the Supreme Court of Queensland on 28 February 2018.
The move comes just days after ASIC commenced proceedings for recovery of unpaid fines against Fast Access Finance Pty Ltd, Fast Access Finance (Beenleigh) Pty Ltd and Fast Access Finance (Burleigh Heads) Pty Ltd (the FAF Companies).
In March 2017, the Federal Court fined the FAF Companies a total of $730,000, after finding in proceedings brought by ASIC that the FAF Companies breached consumer credit laws by engaging in credit activities without holding an Australian credit licence.
The FAF Companies operated under a business model where consumers seeking small value loans were required to sign documents which purported to be for the purchase and sale of diamonds in order to obtain a loan. The reality was that there were no diamonds; it was instead a sham designed to avoid consumer credit laws.
ASIC has applied to the Supreme Court of Queensland for orders to wind up the FAF Companies as a result of the non-payment of the fines.
The winding-up applications will be heard in the Supreme Court of Queensland on 28 February 2018.
[Related: Director of unlicensed payday lender banned]