ASIC has commenced civil penalty proceedings in the Federal Court against Ferratum Australia Pty Ltd (Ferratum) for charging prohibited fees and overcharging consumers who paid off loans early.
ASIC alleges that between March 2019 and August 2021, Ferratum breached consumer credit protection laws in relation to small amount credit contracts by:
- charging borrowers prohibited fees such as direct debit fees when using certain credit cards and fees to alter direct debit arrangements
- entering into contracts with borrowers which imposed prohibited fees
- incorrectly calculating the amounts borrowers had to pay when they repaid their contracts early, leading borrowers to pay more than they had to, and
- failing to act efficiently, honestly and fairly by ensuring it had an accurate and reliable system to calculate, record and monitor the amounts required to pay out contracts early.
ASIC Deputy Chair Sarah Court said, ‘The credit protection laws are designed to protect consumers who need to access small amount loans. ASIC is concerned that the alleged conduct harmed consumers with low incomes and low bank account balances. These types of practices are especially harmful during the COVID-19 pandemic’.
ASIC is seeking civil penalties, declarations and other orders.
The proceeding will be listed for directions on a date to be determined by the Court.
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Background
Ferratum’s ultimate holding company is Multitude SE, a European public limited liability company based in Finland which provides mobile and digital financial services to consumers and small businesses globally.
Under National Consumer Credit Protection laws, a provider of a small amount credit contracts must not impose fees and charges beyond: an establishment fee, a monthly fee, a fee payable in the event of a default in payment under the contract, or a government fee, charge or duty.
A borrower is also entitled to pay out their small amount credit contract at any time and can only be charged an amount that is calculated in accordance with the requirements of the National Consumer Credit Protection Act. Excess payments are prohibited under the Act.
Consumers should contact Ferratum if they believe the company has charged them an prohibited fee. In the event of a dispute, consumers can request the matter be resolved through Ferratum’s internal dispute resolution processes. If the matter is unable to be resolved, consumers can make a complaint to the Australian Financial Complaints Authority (AFCA) on 1800 931 678.
Moneysmart.gov.au has information about payday loans and alternatives and where to find free help with managing debt.
Editor’s note:
The matter has been listed for a case management hearing on 26 November 2021.
Editor’s note 2:
The matter has been listed for a case management hearing on 27 May 2022.
Editor's note 3:
The matter has been listed for a case management hearing on 17 June 2022.
Editor's note 4:
On 16 June 2022, the Court ordered that the matter be listed for case management hearing on 18 August 2022.
Editor’s note 5:
On 18 August 2022, the Court ordered that the matter be listed for case management hearing on 25 August 2022.
Editor's note 6:
On 25 August 2022, the Court ordered that the matter be listed for a five day trial commencing on 5 June 2023 and the parties return for a further case management hearing on 31 August 2022. On 31 August 2022, the Court ordered that the matter be listed for a case management hearing on 30 November 2022.
Editor’s note 7:
On 6 December 2022, the Court ordered that the matter be listed for case management hearing on 7 February 2023.
Editor's note 8:
On 7 February 2023, the Court ordered that the matter be listed for case management hearings on 15 March 2023 and 18 May 2023. The trial date for the matter was changed to commence on 1 June 2023, and is listed for five days.
Editor's note 9:
On 4 April 2023, liquidators were appointed to Ferratum. ASIC’s application for leave to continue its proceeding against Ferratum will be heard on 1 May 2023.
Editor's note 10:
On 1 May 2023, the Court granted ASIC leave to continue its proceeding against Ferratum. The trial will commence on 1 June 2023.
Editor’s note 11:
On 22 May 2023, the Court ordered that the trial date of 1 June 2023 be vacated and the matter be relisted for trial to commence on 5 June 2023.
Editor’s note 12:
The hearing took place on 5 June 2023. Judgment has been reserved.
Editor's note 13:
On 7 September 2023, the Court found Ferratum Australia charged prohibited fees and overcharged customers (23-248MR).