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Wednesday 4 May 2022

22-103MR Lightspeed Finance and director to pay $220,000 for failure to give effect to an AFCA determination

The Federal Court today ordered Lightspeed Finance Pty Ltd and its director Mark James Fitzpatrick pay a total $220,000 for failing to give effect to on an Australian Financial Complaints Authority (AFCA) determination.

The Court found Lightspeed Finance, a credit assistance provider, failed to give effect to an AFCA determination and that, as Lightspeed Finance’s director, Mr Fitzpatrick was knowingly involved in this breach of the National Credit Act.

ASIC Deputy Chair Sarah Court said, ‘When an external dispute resolution decision is made, ASIC expects the determination will be carried out. Complying with AFCA determinations is a critical part of a licensee’s obligations and ensures that consumers have access to a dispute resolution system that works.’

On 4 December 2018, AFCA made a determination against Lightspeed Finance following a consumer complaint about an unaffordable loan. AFCA determined that Lightspeed Finance 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 same consumer, reducing the consumer’s liability even further. Both determinations were accepted by the consumer and were binding on Lightspeed under the AFCA rules.

The $220,000 payment ordered by the court includes $20,000 in penalties, $150,000 in compensation and $50,000 for ASIC’s costs.

In making the orders, Justice Derrington observed that Lightspeed and Mr Fitzpatrick failed to meet the obligations of Lightspeed’s credit licence by refusing to comply with AFCA’s determinations, a central part of Lightspeed’s agreement to be bound by AFCA’s external dispute resolution scheme.

Since 13 March 2019, greater penalties apply for failures to co-operate with AFCA, which include a maximum penalty of $10.5 million for a company and $1.05 million for an individual.

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Judgment

Background

Lightspeed is a credit assistance provider who arranged a loan for the consumer to complete home renovations. AFCA found Lightspeed accepted a business purpose declaration from the consumer when it knew that the loan was not for business purposes, telling the consumer they could obtain refinance at the end of the loan term. AFCA found that Lightspeed was required to comply with obligations under the National Credit Act which would have shown that the loan was unaffordable. The lender was not a member of AFCA at the time of making the loan.

ASIC submitted to the Court that compensation should be paid to the partner of the affected consumer after she lost her house due to Lightspeed Finance’s failure to comply with AFCA determinations.

ASIC encourages anyone having trouble with debt to visit Moneysmart’s urgent help with money or call the National Debt Helpline on 1800 007 007.

Last updated: 04/05/2022 11:27