ASIC has cancelled the Australian credit licence of S & S Enterprises Pty Ltd, trading as appliance rental business Rent To Own Appliances, after ASIC found it had entered into credit contracts where it charged consumers an annual interest rate higher than the 48 per cent maximum allowable under the National Credit Act.
ASIC found that Rent To Own Appliances charged consumers an effective rate of interest as high as 208 per cent.
In response to ASIC's concerns, Rent To Own Appliances has agreed to stop collecting payments on all current contracts and to allow consumers under these 'rent to buy' contracts to keep the goods being purchased under the contracts.
ASIC Deputy Chair Peter Kell said, 'Credit licensees must understand their obligations under the law and take compliance with those obligations seriously. This includes understanding the limits in the law about maximum interest rates which they can charge consumers.
'As this case demonstrates, ASIC will remove those licensees from the industry which fail to meet their obligations under the law'.
Rent To Own Appliances has agreed to maintain its membership with an external dispute resolution scheme, the Credit & Investments Ombudsman (CIO), for a period of at least 12 months after its' credit licence is cancelled.
Consumers who entered into a contract with Rent To Own Appliances and have any questions should contact Rent To Own Appliances on (03) 5964 6512 or 0433 585 130 to discuss the matter. Any consumer who is not happy with Rent To Own Appliances' response should contact CIO on 1800 138 422.
Rent To Own Appliances' credit licence (credit licence number 392764) was cancelled with effect from 26 October 2016.
A 'rent to buy' contract is an arrangement where you agree to purchase an item (for example, a fridge or television) by 'renting' that item for a set period of time. You make regular payments, for example, every month, over the agreed period (say 3 years). Under the terms of the agreement, you are not actually hiring the goods but you are making a commitment to buy them. At the end of the rental period, you own the goods.
Rent to buy contracts are treated under the law as credit contracts and have a maximum allowable annual interest rate of 48 per cent. ASIC's MoneySmart website has a rent to buy calculator to help consumers work out the total cost of their rent to buy contract and also has information on how rent to buy works.
Rent To Own Appliances entered into credit contracts with consumers for furniture and household appliances. It operated a website (www.renttoownappliances.com.au) and traded from Lilydale in Victoria.