FOS and CIO have both recently reported on systemic issues relating to credit that were newly identified during the March quarter of 2016. These de-identified matters were reported to the Australian Securities and Investments Commission (ASIC) in accordance with their processes. Privacy matters are also reported to the OAIC on an identified basis.

Their reports also discuss the possible systemic issue investigations for the March 2016 quarter.

FOS: new definite systemic issues

• Closure of credit card: FOS contacted an FSP about inconsistencies between the expiration date of certain prepaid foreign currency cash cards on its systems and in its physical cards.
• Calculation of fees: An FSP contacted FOS as a result of an administrative error which it confirmed affected a large number of customers. The error involved ongoing service fees continuing to be incurred for some customers although their ongoing service arrangements had concluded. The FSP noted that various processes had failed in this regard. The FSP advised FOS that it self-reported the breach to the regulator and has commenced remediation with the regulator’s oversight.

CIO: definite systemic issues investigation outcomes

• Interest in excess of cap: a lender refunded more than $360,000 to 732 consumers who had been charged interest in excess of the maximum permitted under a state-based cap. This issue arose when the FSP inadvertently applied the incorrect legislation in cases where residents of one jurisdiction took out loans in another.
• Unlawful security: a broker amended its standard fee agreement to remove a clause that sought to allow the FSP to lodge a caveat over land, securing the payment of its fees.
• Insufficient disclosure: a lender amended its template precontractual disclosure documentation after CIO identified that this did not contain all prescribed information, including details of the FSP’s EDR membership.
• Default listings: a lease, hire or rental provider removed a number of default listings placed on consumers’ credit files, after CIO identified that the FSP had made these listings in breach of its requirement that enforcement action be suspended until CIO has finished dealing with a complaint.
• Credit guide: a debt purchaser or collector amended its practices to ensure consumers receive a credit guide as soon as practicable after their debts are assigned, after CIO identified that the FSP had previously failed to do so.