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21-275MR ASIC sues debt collection company for breaching consumer credit protection laws
ASIC has commenced civil penalty proceedings in the Federal Court against Ultimate Credit Management Pty Ltd.
ASIC alleges that between 10 May 2019 and 11 December 2019, Ultimate Credit Management began proceedings against 24 borrowers in NSW even though the borrowers lived in other states.
National consumer credit protection legislation requires credit providers to commence debt recovery proceedings in the state or territory in which the borrower lives.
The original loan amounts that Ultimate Credit Management sought to recover from these proceedings ranged from as little as $400 to $2,850.72. Most of these loans were high cost, attracting interest at 48% per annum.
ASIC is concerned that these alleged failures resulted in significant consumer harm. Commencing proceedings outside of a borrower’s home state makes it much more difficult for borrowers to defend themselves in the proceedings, especially if they wish to appear in person.
The Financial Ombudsman Service and subsequently the Australian Financial Complaints Authority (AFCA) advised Ultimate Credit Management as early as 17 May 2018 that beginning proceedings against borrowers outside of the borrower’s home state was a breach of the obligations imposed on credit licensees. However, ASIC alleges that Ultimate Credit Management continued to initiate such proceedings.
ASIC alleges that Ultimate Credit Management’s conduct breached its obligation as a credit licensee to do all things necessary to ensure that it engaged in credit activities efficiently, honestly and fairly.
ASIC is seeking declarations and pecuniary penalties against Ultimate Credit Management.
The date for the first case management hearing is yet to be scheduled by the Court.
Ultimate Credit Management buys consumer credit contracts from credit providers and tries to recover those debts from the borrowers. It has held a credit licence since 25 September 2015.
ASIC previously commenced proceedings against Membo Finance Pty Ltd and its sole credit representative Richmond Group Financial Services Pty Ltd for conduct that includes allegedly commencing court proceedings in NSW when debtors lived in other states or territories (21-049MR).
If you have a complaint about your dealings with Ultimate Credit Management, you can complain to AFCA. AFCA is an independent dispute resolution service providing free, fair and independent help with financial disputes and can be contacted on 1800 931 678.
If you have a debt that was sold to Ultimate Credit Management and you are experiencing financial difficulty in connection with a credit product, you should contact Ultimate Credit Management in the first instance to discuss a hardship arrangement. If you are unable to come to a suitable arrangement, we encourage you to contact AFCA.
The proceeding has been listed for a case management hearing at 9.30am on 13 April 2022.