ASIC has announced that it has commenced proceedings in the Federal Court against Commonwealth Bank of Australia (CBA) for alleged contraventions of the responsible lending provisions of the National Consumer Credit Protection Act 2009 (National Credit Act).
The action against CBA is for failures to take account of a notification by a customer that he was a problem gambler and to take reasonable steps to verify his financial situation before offering and approving a credit card limit increase which he applied for.
ASIC alleges that CBA failed to:
- undertake reasonable inquiries and verification of the customer’s financial circumstances prior to making an assessment to increase his credit limit;
- assess that the credit limit increase was unsuitable for the customer and in subsequently providing the credit limit increase; and
- comply with its credit licence conditions.
Since CBA’s conduct, the law has changed, and now credit card providers must consider whether a consumer can repay an increased credit limit within a three year period set by ASIC. The law now does not allow credit limit increase offers like those made in this case.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
