The Federal Court has found two finance broking companies owned by a former NSW president of the FBAA engaged in unconscionable and misleading conduct.
ASIC has announced the court decision finding that the Australian Lending Centre Pty Ltd and Sydney Lending Centre Pty Ltd, both owned and controlled by former NSW FBAA president Christopher John Riotto, had placed borrowers in inappropriate and unserviceable loans.
Brokers for the companies were found by the court to have put clients into business loans when they knew the clients wanted personal loans. In two cases, the brokers also represented to lenders that the loans were for business purposes.
In another case, the court found that a broker engaged in unconscionable conduct by securing a business loan for a client who the court said "suffered from a clearly identifiable disability" which was exploited to have him sign a broking contract and loan.
The lender in the case, AMR Investments Pty Ltd, was also owned and controlled by Riotto. The court found that AMR also engaged in unconscionable conduct, and that Riotto was knowingly involved with both the broker and AMR's contraventions.
As a result of the findings, the court granted an injunction restraining future similar conduct and awarded compensation to a borrower who suffered a "significant loss".