ASIC’s recent action against car finance provider, BMW Australia Finance Ltd (BMW Finance) is an example of ASIC using its power to issue National Credit Act infringement notices for strict liability offences.
ASIC has announced that BMW Finance, has paid penalties totalling $391,000 and had a condition placed on its Australian credit licence following concerns raised by ASIC. The penalties are in addition to penalties totalling $306,000 imposed in January 2015 after ASIC found that BMW Finance breached consumer protection provisions relating to the repossession of motor vehicles.
ASIC found that between November 2014 and May 2015, BMW Finance:
- failed to make reasonable inquiries about, and take reasonable steps to verify, consumers’ stated living expenses, income and cash at bank when there was an unexplained discrepancy in the figures provided, and made insufficient inquiries about consumers’ capacity or plans to repay substantial balloon repayments due at the conclusion of the loan term;
- failed to assess credit contracts it entered into with consumers as unsuitable, and entered into unsuitable credit contracts, when documentation provided by consumers showed there was insufficient income available after expenses to service monthly loan repayments; and
- failed or delayed in its obligations to provide customers with statutory information setting out their rights and the options available to them after a finance company repossesses a mortgaged vehicle or the consumer voluntarily returns that vehicle.
The licence condition imposed by ASIC requires BMW Finance to appoint an independent compliance consultant to conduct a review of, and report to ASIC on BMW Finance’s policies and procedures on a quarterly basis over 12 months to ensure compliance with consumer credit laws.
