ASIC has commenced proceedings in the Federal Court against credit assistance provider Lightspeed Finance Pty Ltd (Lightspeed) and its director Mark James Fitzpatrick for failing to comply with Australian Financial Complaints Authority (AFCA) determinations.
On 4 December 2018, AFCA made its first determination regarding a Lightspeed client complaint. The determination required Lightspeed to pay a loan debt (including interest) owed by the client to a lender, prior to the client repaying Lightspeed the initial loan amount. On 12 July 2019, AFCA made a second determination in favour of the client, further reducing the client’s liability. Both determinations were accepted by the client and were binding on Lightspeed under the AFCA rules.
ASIC alleges Lightspeed failed to give effect to both AFCA determinations and that Mr Fitzpatrick was knowingly involved in these breaches.
Since 13 March 2019, reforms introduced as a result of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Royal Commission mean that a failure to co-operate with AFCA is a civil penalty offence with penalties of $10,500,000 for a company and $1,050,000 for an individual.
ASIC considers that compliance with external dispute resolution decisions is a critical part of a licensee’s general obligations and ensures that consumers have access to efficient independent dispute resolution.
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Background
Lightspeed is a credit assistance provider who arranged a loan for the client to complete home renovations. AFCA found Lightspeed accepted a business purpose declaration from the client when it knew that the loan was not for business purposes, telling the client they could obtain refinance at the end of the loan term. The client and his partner were on unemployment benefits and subsequently defaulted on their loan. AFCA found that Lightspeed was required to comply with obligations under the National Consumer Credit Protection Act 2009 (Cth) which would have shown that the loan was unaffordable. The lender was not a member of AFCA at the time of making the loan.
Editor's note 1:
Following a case management hearing on 13 May 2021, a further case management hearing was scheduled for 7 June 2021.
Editor's note 2:
The case management hearing scheduled for 7 June 2021 has been vacated, and a further case management hearing is now scheduled for 9:00am on 8 July 2021.
Editor's note 3:
Following a case management hearing on 8 July 2021, the matter was adjourned until 23 July 2021.
Editor's note 4:
The case management hearing scheduled for 23 July 2021 has been vacated and a further case management hearing is now scheduled for 18 October 2021.
Editor's note 5:
At the case management hearing on 18 October 2021 the matter was set down for hearing on 21 and 22 April 2022.
Editor's note 6:
The matter was heard on 21 April 2022 and reasons for the judgement will be published on 4 May 2022.