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Friday 1 November 2013

13-301MR Rental goods provider pays 27500dollars penalty - enters into enforceable undertaking

ASIC has issued an infingement notice and entered into an enforceable undertaking (EU) with a national rental goods provider after a surveillance found deficiencies in its operating and compliance practices.

Rent The Roo Pty Ltd (RTR) has paid a penalty of $27,500 after ASIC issued it with an infringement notice for a breach of the responsible lending laws under the National Consumer Credit Protection Act 2009 (National Credit Act). ASIC has also accepted an EU from RTR under which an independent compliance consultant will be appointed to review RTR's policies and procedures.

ASIC was particularly concerned because RTR regularly deals with consumers who receive social security or government benefits as their only source of income, including Indigenous consumers living in remote locations who have limited access or exposure to other mainstream retail and/or credit services and whose first language may not be English.

ASIC’s surveillance found two credit representatives appointed by RTR under its Australian credit licence had failed to conduct proper verification of consumers' financial situations before entering into consumer goods leases.

ASIC was also concerned RTR did not have proper systems in place to ensure its large network of representatives complied with the responsible lending obligations under the National Credit Act.

Deputy Chairman Peter Kell said, ‘Credit licensees have an obligation to ensure their representatives adhere to their licence requirements, especially when dealing with vulnerable consumers.’

The payment of an infringement notice is not an admission of a contravention of the National Credit Act. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain provisions of the National Credit Act.

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Infringement notice

Enforceable undertaking

Background

RTR operates nationally through a network of franchises. The franchises are either independently licensed or act as credit representatives of RTR under its Australian credit licence. Under the consumer credit legislation, licence holders are responsible for the conduct of their representatives. ASIC's concerns related to two of RTR's credit representatives.

Section 153 of the National Credit Act requires a credit licensee to, among other things, make reasonable inquiries about a consumer's requirements and objectives in relation to a consumer lease and their financial situation and to then take reasonable steps to verify the consumer's financial situation.

ASIC’s crackdown on responsible lending and credit laws has seen action taken against firms that failed to observe their obligations, including:

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Last updated: 01/11/2013 12:00