ASIC cancels credit licence and bans director for 10 years

by Julia Corderoy26 Nov 2014
ASIC has cancelled the Australian credit licence of Net Finance and banned its director Graham Tandy from the credit industry for 10 years for failing to provide credit activities honestly. A second employee responsible for the day-to-day operations of Net Finance, John Murphy, has also been banned for eight years.

An ASIC investigation found Net Finance induced a consumer to make a false business declaration when applying for a loan by requesting a handwritten note falsely setting out that the loan was for business purposes.

The investigation also found that the company did not make relevant inquiries and assessments, and assisted a consumer to obtain a loan which was unsuitable. The consumer was forced to sell his home when he could not meet his obligations under the loan.

Deputy Chairman Peter Kell said, “Individuals in trusted positions must ensure they understand and adhere to their obligations. Those who fail in this regard will be removed from the industry.”

 

COMMENTS

  • by Steve McClure 26/11/2014 9:41:34 AM

    Time & again, I hear brokers say in regards to applications & declarations "the client signed it, so it's their problem". That might have been the case pre-NCCP, but certainly not now. That and the requirement to ensure a suitable product are the pre-eminent obligations of lenders & brokers.

    Which leads me to ask, what examination of the lender's processes took place in this matter?

  • by QEDRisk 26/11/2014 10:35:14 AM

    Guys the NCCP Act/Regs still allow for these declarations but they are a waste of time and not worth the paper they're signed on. The Act effectively says that the declaration will be void if you don't do the homework to ensure that the purpose of the credit really is non-consumer. Therefore, what's the use of getting the declaration?!

    And while we're at it - I did come across someone this week that still didn't understand that a loan to invest in a resi property for renting out is a consumer loan and not a business loan.

  • by Maria Rigoni 27/11/2014 12:59:05 AM

    So let's examine why Business Purpose loans have no protection.