In Australian Securities and Investments Commission v Lightspeed Finance Pty Ltd [2022] FCA 469 the Federal Court of Australia declared that Lightspeed Finance as a licensed credit assistance provider breached section 47(1)(m) of the National Credit Act by failing to give effect to the determination of the Australian Financial Complaints Authority against Lightspeed Finance following a consumer complaint about an unaffordable loan. The borrower’s home was sold after she defaulted in loan repayments.
The Federal Court also declared that Lightspeed’s director Mark James Fitzpatrick was involved in the contravention by Lightspeed and therefore also contravened section 47(1)(m) of the National Credit Act.
Lightspeed was ordered to pay to the Commonwealth a pecuniary penalty in the amount of $15,000 for its breach of section 47(1)(m) as well as compensation to Lightspeed’s borrower of $150,000 after she lost her house due to Lightspeed Finance’s failure to comply with AFCA determinations.
Fitzpatrick was ordered to pay to the Commonwealth a pecuniary penalty in the amount of $5,000 by reason of his breach of section 47(1)(m).
Lightspeed and its director were ordered to pay ASIC’s costs of $50,000.
Lightspeed arranged a loan from a private lender for the consumer to complete home renovations. AFCA found Lightspeed accepted a business purpose declaration from the consumer when it knew that the loan was not for business purposes, telling the consumer they could obtain refinance at the end of the loan term. The lender was not a member of AFCA at the time of making the loan.
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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.
