ASIC has commenced proceedings for recovery of unpaid fines and cost orders against Channic Pty Ltd (Channic), Cash Brokers Pty Ltd (Cash Brokers) and the director of those companies, Mr Colin William Hulbert.
In April 2017, the Federal Court fined Channic, Cash Brokers and Mr Hulbert a total of $776,000 and ordered the payment of ASIC's costs of $420,000 after finding in proceedings brought by ASIC that Channic and Cash Brokers breached the National Credit Act, engaged in unconscionable conduct and entered into unjust transactions. Channic, Cash Brokers and Mr Hulbert operated a used car dealership in Cairns.
ASIC brought civil penalty proceedings against the companies after the Indigenous Consumer Assistance Network (ICAN) reported that Channic and Cash Brokers were dealing unjustly with vulnerable Indigenous consumers from the remote community of Yarrabah.
ASIC has applied to the Supreme Court of Queensland and the Federal Circuit Court of Australia for orders to wind up Channic and Cash Brokers and to bankrupt Mr Hulbert as a result of the non-payment of these fines and costs.
The bankruptcy proceedings will be heard in the Federal Court of Australia on 15 February 2018 and the winding-up applications will be heard in the Supreme Court of Queensland on 28 February 2018.
Background
ASIC commenced its proceedings after an investigation revealed that Cash Brokers was assisting consumers to obtain loans from Channic at an interest rate of 48% to purchase vehicles from a related entity. This was in addition to charging brokerage fees of up to $990. Channic did not assess whether the loans were suited to the consumers' requirements. The consumers largely lived in the relatively isolated Aboriginal community of Yarrabah, located near Cairns.
In addition to imposing fines and cost orders, the Court also awarded a total of $47,699 in compensation to affected consumers, which also remains unpaid.
This action came as a result of collaboration between ASIC's Indigenous Outreach Program and ICAN. ASIC's Indigenous Outreach Program is staffed by lawyers and analysts, the majority of whom are Indigenous. The Indigenous Outreach Program gathers intelligence from Indigenous consumers and their advocates (such as ICAN), undertakes surveillance, implements targeted financial literacy programs and works with industry to improve access to appropriate products and services.
ICAN, among other things, provides financial counselling services to Indigenous consumers in North QLD and noticed that many of their clients were suffering financial hardship as a result of loans they had taken out with Channic. ICAN assisted ASIC to maintain communication with Indigenous consumer witnesses throughout the course of the proceedings.
ASIC's MoneySmart website has information for Indigenous consumers on buying a car.
ASIC also offers a dedicated help line to assist Indigenous consumers with financial issues (Phone: 1300 365 957).
Editor's Note:
Mr Hulbert declared himself bankrupt on 6 February 2018, prior to the hearing of ASIC's bankruptcy application. ASIC's application was therefore dismissed and an order made that ASIC's costs of the application be paid from Mr Hulbert's estate.