Car finance provider, BMW Australia Finance Ltd (BMW Finance), has paid penalties totalling $391,000 and had a condition placed on its Australian credit licence following concerns raised by ASIC.
The licence condition requires BMW Finance to appoint a compliance consultant after ASIC found it breached important consumer protection provisions relating to responsible lending and the repossession of motor vehicles.
ASIC found that between November 2014 and May 2015, BMW Finance:
- failed to make reasonable inquiries about, and take reasonable steps to verify, consumers' stated living expenses, income and cash at bank when there was an unexplained discrepancy in the figures provided, and made insufficient inquiries about consumers' capacity or plans to repay substantial balloon repayments due at the conclusion of the loan term;
- 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
- failed or delayed in 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 customers entering into unsuitable loans and losing the benefit of important protections to reduce the impact of financial hardship.
ASIC Deputy Chair Peter Kell said, 'The outcome with BMW Finance shows failing to comply with important consumer protection provisions can result in significant penalties. ASIC will continue to monitor compliance with these provisions to reduce the risk of borrowers being placed into unsuitable loans, and to ensure that borrowers are informed of their rights and options available to them when facing financial hardship.'
In addition to the penalties, the licence condition requires BMW Finance to appoint an independent compliance consultant to conduct a review of, and report to ASIC on BMW Finance's policies and procedures on a quarterly basis over 12 months to ensure compliance with consumer credit laws.
Background
BMW Finance, holder of an Australian credit licence, provides motor vehicle finance to consumers, directly and through a network of motor vehicle dealers.
In January 2015 ASIC issued 36 infringement notices to BMW Finance totalling $306,000 after finding that it breached consumer protection provisions relating to the repossession of motor vehicles (refer 15-037MR).
Following further investigation into BMW Finances' responsible lending and collection practices, ASIC has issued a further 22 infringement notices totalling $391,000 to BMW Finance because ASIC has reasonable grounds to suspect it breached a further five provisions on the National Consumer Credit Protection Act 2009 (National Credit Act).
The National Credit Act allows infringement notices to be issued for strict liability offences and certain civil penalty contraventions where ASIC has reasonable grounds to believe a person has contravened the provision. The payment of an infringement notice is not an admission of a contravention of the National Credit Act.
Consumers who think they may be affected by the above conduct should contact BMW Finance in the first instance at resolutionsofficer@bmwfinance.com.au. If the matter cannot be resolved with BMW Finance, consumers should contact the Credit and Investments Ombudsman at www.cio.org.au.