It’s fair to say that because some asset finance companies make obtaining loans seem easy, there’ll always be some companies who think it’s just as easy to bend the rules. Nothing could be further from the truth, as a recent case involving a car dealership made clear.
The Australian Securities and Investment Commission (ASIC) case concerned a car dealership in Parramatta, NSW, which took some illegal actions while not holding an Australian credit licence. Like many such dealerships, the company was able to offer finance under the ‘point of sale’ exemption (POS exemption), which allows dealerships to find finance for their customers from licensed credit providers.
Where this dealership went wrong, intentionally or unintentionally, was in extending finance to be used for goods and services beyond the ones they offered. In other words, they should only have been procuring finance for vehicles they were selling.
To cut a long story short, the dealership went beyond this to help 75 customers obtain finance for cars bought elsewhere, or to help them pay off existing car loans.
We can speculate on the reasons for doing this: to free up the customers’ finances so that they could then purchase case from this dealership, to prevent defaults on an existing purchase from the dealership, or simply so that the dealership could benefit from administration fees.
Bending the rules may have seemed like a good idea – until ASIC caught up with them. The result is a $42,500 infringement notice, and an order to refund 49 consumers a total of $36,250 in dealer administration fees.
It’s a reminder that all dealerships and brokerages in the asset finance market should remember the importance of compliance with the National Consumer Credit Protection Act 2009 (National Credit Act). Infringements such as this damage the industry and hurt us all. That’s why we’re always ready to answer your queries and, if you ask us to, support your business through effective training in lender products and compliance.
