Motor Finance Wizard to repay $11m to second-hand car customers
Updated May 24, 2017 14:11:00
Another consumer lease and loan provider will pay a hefty penalty, after an investigation raised serious concerns about its lending practices.
Motor Finance Wizard has signed an enforceable undertaking to refund and write-off $11 million in loans and leases, and set up a remediation program for customers.
The business provides consumer leases and loans for second-hand cars and advertises its financial products extensively on television.
The company’s ads state that it will say “yes” to customers applying for car loans, including where other firms have refused finance.
Those targeted in some of the company’s advertising include people who have had credit defaults, ex-bankrupts, sole parent pensioners and the unemployed.
The Australian Securities and Investments Commission (ASIC) found the company failed to reasonably assess the affordability of its products for customers.
“Our responsible lending rules are clear: Licensees must make proper inquiries into each customer’s capacity to repay a consumer lease or loan,” ASIC deputy chair Peter Kell said.
“Otherwise customers could end up signing up for a loan or lease they simply cannot afford.”
The undertaking applies to 1,511 customers who entered a consumer lease or loan between 1 July 2010 and 16 July 2014.
“Motor Finance Wizard is currently in the process of identifying customers who may be eligible for the remediation program,” the company said on its website.
“If you are eligible, Motor Finance Wizard will contact you – by email, letter or phone – as soon as practicable.”
It is the latest in a series of investigations that have resulted in significant fines for lease and loan providers.
Cash Converters will refund $10.8 million to small-amount loan customers after ASIC found systemic failures in its responsible lending processes.
However, that investigation was criticised by consumer advocates because ASIC’s action only applied to customers who had taken out loans online, and did not cover in-store loans.
First posted May 24, 2017 12:53:21
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