ANZ agrees to pay $5m for lending breach

by Manuelita Contreras18 Jan 2018

ASIC said today that it is acting against ANZ for loans approved through the bank’s former car finance business Esanda. It has separately taken action against the three finance brokers involved in submitting false documents to ANZ. 

ANZ has agreed to pay a $5m fine as part of the settlement.

The bank has admitted 24 contraventions of the responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) for car loans approved by Esanda from three finance brokers. ASIC has begun civil penalty proceedings in the Federal Court against the bank.

ASIC alleges that between 25 July 2013 and 12 May 2015, ANZ failed to meet its lending obligations when it relied only on payslips included in 12 car loan applications to verify the consumer's income, "in circumstances where it knew that payslips could be easily falsified and it had reason to doubt the reliability of information from the particular broker businesses”.

ANZ said it detected and reported the suspected fraudulent conduct by the brokers and that it has disaccredited the individuals responsible for submitting the 12 loan contracts and no longer accepts loan applications from them.

“ANZ has worked closely with ASIC on its investigation of this matter. We take our responsible lending obligations seriously and we have since taken steps to strengthen our ability to prevent and detect fraud by third parties,” said ANZ Group Executive Australia Fred Ohlsson in a statement.  

ASIC and ANZ have filed a Statement of Agreed Facts and Admissions in the Federal Court and will make joint submissions proposing that ANZ pay $5 million in penalty. The court will decide how much ANZ should pay. 

Proceedings for a first Case Management Hearing is set for 2 February.

Besides paying around $5m to about 320 car loan customers for loans taken out through the three brokers, ANZ will:

•    offer eligible customers the option of entering into a new loan on more favourable terms than the existing loan;
•    provide refunds to some customers who have paid their loan out or had the car repossessed; and
•    remove any default listings resulting from the relevant loan.

COMMENTS

  • by David Gandolfo, CAFBA President 18/01/2018 4:47:29 PM

    ASIC's own reporting of this issue is online at http://asic.gov.au/about-asic/media-centre/find-a-media-release/2018-releases/18-013mr-asic-acts-against-anz-for-breaching-responsible-lending-laws-in-its-former-esanda-car-finance-business/

    ASIC's reporting and linked documents would suggest that these "brokers" worked in a car dealership, and it appears that they were writing Esanda loans as part of a floorplan arrangement as business managers rather than as brokers.

    Prior to the commencement of the NCCP Act in 2010, Government exempted Point of Sale (POS) vendor introducers who engage in credit activities at the point of sale from the requirements of the Act, including the credit licensing regime & the responsible lending obligations. This was intended to be an interim exemption for 12 months to allow the Government to consider the market and processes in greater detail. But that was eight years ago and CAFBA has continually fought hard to remove the POS exemption that is afforded to motor dealers and their Business Managers.

    In short, motor dealers do not have to adhere to responsible lending guidelines when dealing with consumers - and that must change!

    It's a pity ASIC and today's edition of AustralianBroker haven't made the very clear and important distinction between qualified and licenced brokers, and car yard business managers. And while ASIC is efficient at prosecuting breaches, it needs to close the anomaly that provides a place for them to happen.

    David Gandolfo
    President
    Commercial & Asset Finance Brokers Association of Australia (CAFBA)