Finance broker Jeremy (WA) Pty Ltd (the company) has paid $20,400 in penalties in compliance with two infringement notices issued by ASIC for making false or misleading representations. Each infringement notice imposed a penalty of $10,200.
The marketing representations, which in effect offered 'guaranteed car finance' to consumers, were published on websites operated by the company at guaranteedcarfinance.com.au and yes-loans.com.au and using the Google Adwords service which linked to the company's website at getapproved.com.au.
ASIC was concerned the representations were false or misleading under the national consumer law because an unconditional guarantee that finance can be provided is inconsistent with responsible lending laws.
Responsible lending prohibits lenders from entering into unsuitable credit contracts with consumers, including where a consumer would not have reasonable capacity to meet loan repayments. This means that loans cannot be 'guaranteed' in all circumstances, especially if they would result in a consumer experiencing financial difficulties.
ASIC Deputy Chairman Peter Kell said, ‘ASIC will continue to monitor both traditional and non-traditional media to ensure lenders and finance brokers are complying with the law in their marketing to consumers. We will take action where we identify ads that may mislead consumers.’
The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.
ASIC has previously issued warnings and guidance about the use of high impact terms like 'guaranteed finance'. Earlier notices were:
ASIC takes action on car finance advertising under credit legislation (refer: 12-76MR)
Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) at RG 234.111–114.
ASIC has also recently taken action against other credit licensees in respect of their false or misleading advertising, including:
This media release was edited on 11 February 2014.