ASIC has announced that it has settled its claim against Volkswagen Financial Services Australia Pty Limited (VWFSA), discontinuing its Federal Court proceeding and accepting a Court Enforceable Undertaking (CEU) from the car financier.

Under the CEU VWFSA will implement a consumer remediation program which will provide $4.7 million in redress to approximately 1,800 consumers including:

• $4.1 million in remediation payments to consumers who entered into a consumer loan with VWFSA between 1 July 2012 and 30 April 2017 ;
• $600,000 in interest rate reductions on current contracts; and
• taking reasonable steps to remove default listings from credit bureau files.

VWFSA acknowledges ASIC’s concerns in respect of VWFSA’s lending practices in relation to 90,317 regulated Credit Contracts over the period 1 July 2012 to 30 April 2017 as follows:

(a) VWFSA may have contravened sections 128(d), 130(1)(b) and 130(1)(c) of the National Credit Act by not inquiring as to certain categories of living expenses (Living Expenses) and/or taking steps to verify Living Expenses when offering and entering into Consumer Credit Contracts;

(b) VWFSA may have contravened section 47(1)(a) of the National Credit Act by not having adequate policies, processes, or training in place regarding the making of inquiries and verification of Living Expenses; and

(c) VWFSA utilised an automated capacity calculation system, using the higher of the figure provided by consumers for Living Expenses and a weighted benchmark figure (derived through the application of the Henderson Poverty Index and later the Household Expenditure Measure benchmark).

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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.