Car finance provider, BMW Australia Finance Ltd (BMW Finance), has paid penalties totalling $391,000 and had a condition placed on its Australian credit licence following concerns raised by ob体育.
The licence condition requires BMW Finance to appoint a compliance consultant after ob体育 found it breached important consumer protection provisions relating to responsible lending and the repossession of motor vehicles.
ob体育 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 聽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.聽
These failures by BMW Finance to comply with the requirements of the law resulted in customers entering into unsuitable loans and losing the benefit of important protections to reduce the impact of financial hardship.
ob体育 Deputy Chair Peter Kell said, 'The outcome with BMW Finance shows failing to comply with important consumer protection provisions can result in significant penalties. ob体育 will continue to monitor compliance with these provisions to reduce the risk of borrowers being placed into unsuitable loans, and to ensure that borrowers are informed of their rights and options available to them when facing financial hardship.'
In addition to the penalties, the licence condition requires BMW Finance to appoint an independent compliance consultant to conduct a review of, and report to ob体育 on BMW Finance's policies and procedures on a quarterly basis over 12 months to ensure compliance with consumer credit laws.
Background
BMW Finance, holder of an Australian credit licence, provides motor vehicle finance to consumers, directly and through a network of motor vehicle dealers.
In January 2015 ob体育 issued 36 infringement notices to BMW Finance totalling $306,000 after finding that it breached consumer protection provisions relating to the repossession of motor vehicles (refer ).
Following further investigation into BMW Finances' responsible lending and collection practices, ob体育 has issued a further 22 infringement notices totalling $391,000 to BMW Finance because ob体育 has reasonable grounds to suspect it breached a further five provisions on the National Consumer Credit Protection Act 2009 (National Credit Act).
The National Credit Act allows infringement notices to be issued for strict liability offences and certain civil penalty contraventions where ob体育 has reasonable grounds to believe a person has contravened the provision. The payment of an infringement notice is not an admission of a contravention of the National Credit Act.
Consumers who think they may be affected by the above conduct should contact BMW Finance in the first instance at [email protected]. If the matter cannot be resolved with BMW Finance, consumers should contact the Credit聽and Investments Ombudsman at .