Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Car finance company to pay $11m in remediation
Powered by MOMENTUM MEDIA

Website Notifications

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

sme logo

Car finance company to pay $11m in remediation

cars  cars
Lucy Dean 2 minute read

A motor financing company is to pay more than $11 million in refunds and write-offs after failing to meet responsible lending obligations.

The Australian Securities & Investments Commission (ASIC) undertook a probe, which found that Motor Finance Wizard failed to “make reasonable inquiries about consumers’ income and expenses [and] to take reasonable steps to verify consumers’ expenses”.

Advertisement
Advertisement

The ASIC investigation found that, between 1 July 2010 and 16 July 2014, the company used an internally-generated benchmark to ascertain the consumer’s ability to make repayments on loans and leases for second-hand cars, rather than conducting an actual investigation into the consumer’s living expenses.

“This benchmark did not have any connection to the actual expenses of the consumer and was unrealistically low,” ASIC said.

Branches at Kedron, St. Marys, Slacks Creek, Klemzig, Maidstone and Dandenong were implicated in the findings.

Following the findings, Motor Finance Wizard has signed an enforceable undertaking to provide more than $11 million in refunds and write-offs to 1,511 customers who entered into a lease or loan between the specified dates.

Motor Finance Wizard is also required to make a $100,000 payment to a community benefit program funding consumer initiatives.

An independent expert will review the company’s current operations and report to ASIC, while an independent auditor reporting to ASIC will oversee Motor Finance Wizard as the company re-assesses each consumer’s ability to make lease or loan payments under a remediation program.

Affected customers have the option to terminate the lease and should they elect to keep the lease will be allowed to keep the car at the end of the lease term.

ASIC deputy chair Peter Kell said: "Our responsible lending rules are clear: Licensees must make proper inquiries into each customer's capacity to repay a consumer lease or loan."

[Related: Director of motor finance company convicted of concealing a company debt]

Car finance company to pay $11m in remediation
cars
TheAdviser logo
cars
FROM THE WEB
more from the adviser
handshake 1 850 Asset finance lender acquired for $260m

Equipment finance lender Axsesstoday, which had been placed into ...

StephenMoore850 Brokers encouraged to seize data opportunities

Head of Choice Aggregation Stephen Moore has encouraged brokers t...

megaphone crowd ta Brokers have their say on serviceability changes

Several leading brokers have suggested that APRA’s recent chang...