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13-022MR ASIC accepts enforceable undertaking from Mr Rental
Mr Rental Australia Pty Ltd, a household goods rental business, has entered into an enforceable undertaking (EU) with ASIC under which it will provide refunds to approximately 1,560 consumers (anticipated to be in excess of $300,000), and amend the standard form rental contract used by the 52 franchisees operating under the Mr Rental banner.
An ASIC investigation into Mr Rental’s standard form rental agreement gave rise to concerns that the inclusion of a term allowing Mr Rental to charge a ‘calculation period adjustment’ (that is, an additional fee charged to consumers who terminated their rental agreements early), was an unfair contract term under the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Australian Consumer Law.
ASIC has accepted the EU from Mr Rental in resolution of its concerns over the calculation period adjustment term. As part of its undertaking to ASIC, Mr Rental will:
write to those customers who paid a calculation period adjustment and provide them with a refund of the amount paid
advise existing customers that it will not charge a calculation period adjustment in the event they terminate their agreements early
not enter into any further rental agreements which allow it to charge a calculation period adjustment upon early termination.
ASIC had additional concerns that the rental agreement was regulated by the National Consumer Credit Protection Act 2009 (National Credit Act). ASIC understands that Mr Rental or its franchisees intend to apply for an Australian credit licence.
ASIC is responsible for regulating the provision of consumer credit in Australia under both the National Credit Act and the ASIC Act, which includes the Australian Consumer Law as it applies to financial services such as credit contracts and consumer leases. The Australian Consumer Law deals with unfair contract terms in standard form contracts. It provides for unfair contract terms to be declared void and for compensation to be paid to those consumers who have suffered loss as a result of an unfair contract term.
The National Credit Act regulates most consumer leases. Generally persons who enter into consumer leases are required to hold an Australian credit licence.