ASIC today announced a package of regulatory actions against Australia and New Zealand Banking Group Ltd (ANZ) for loans approved through its former car finance business Esanda, including around $5 million in remediation. The loans were submitted by three broker businesses to ANZ.
Civil penalty proceedings
ASIC has commenced civil penalty proceedings in the Federal Court against ANZ, in which ANZ has admitted 24 contraventions of the responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) for car loans approved by Esanda from three broker businesses.
ASIC alleges that between 25 July 2013 and 12 May 2015, ANZ failed to meet its responsible lending obligations when relying only on payslips included in 12 car loan applications to verify the consumer's income, in circumstances where it knew that payslips could be easily falsified and it had reason to doubt the reliability of information from the particular broker businesses.
This action relates to ANZ's own responsible lending obligations, which require lenders to take reasonable steps to verify the information provided by borrowers. ASIC has separately taken action against the broker businesses that were involved in submitting false documents to ANZ (see below).
ASIC and ANZ have filed a Statement of Agreed Facts and Admissions in the Federal Court. They will make joint submissions that an appropriate penalty to be paid by ANZ is $5 million. The penalty amount payable by ANZ will be determined by the Court.
The Court has listed the proceedings for a first Case Management Hearing on Friday 2 February 2018.
Remediation
ANZ will remediate approximately 320 car loan customers for loans taken out through three broker businesses from 2013 to 2015, totaling around $5 million. The loans are likely to have been affected by fraud. ANZ will:
- offer eligible customers the option of entering into a new loan on more favourable terms than the existing loan
- provide refunds to some customers who have paid their loan out or had the car repossessed
- remove any default listings resulting from the relevant loan.
ANZ is expected to commence contacting customers eligible for remediation in February 2018. Customers can contact ANZ on: 132 373.
ASIC acknowledges ANZ's cooperation with its investigation and in resolving its regulatory concerns.
Background
ASIC has taken separate actions in relation to the three brokers who submitted false documents to ANZ:
- 15-281MR ASIC imposes licence conditions on United Financial Services Pty Ltd
- 16-209MR Former Sydney finance broker sentenced to intensive correction order
- 16-302MR ASIC permanently bans former Sydney finance broker
- 16-456MR Used-car finance broker permanently banned
- 17-134MR ASIC acts against car yard loan-writer
- 17-347MR ASIC permanently bans convicted car yard loan-writer
ASIC's Regulatory Guide 209 Credit licensing: Responsible lending conduct sets out practical guidance for lenders and credit intermediaries (including brokers) on how to comply with their responsible obligations.
Editor's note:
On 1 February 2018 the court vacated the case management conference scheduled for 2 February and has listed the proceeding for hearing on liability and penalty on 15 February 2018.
Editor's note 2:
On 15 February 2018, the proceeding was heard in the Federal Court and declarations and orders were made, as agreed by the parties, that:
- ANZ had contravened the responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) in respect of 12 car loans approved by Esanda, by failing to take reasonable steps to verify the consumer's income before entering into the loan contract;
- ANZ pay to the Commonwealth of Australia a pecuniary penalty of $5 million in respect of the contraventions; and
- ANZ pay ASIC's legal costs of $120,000.
The court will publish its written judgment in due course.