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In a decision handed down on Friday, the Federal Courthas found that car lender Money3 breached responsible lending laws.

The case, brought by the Australian Securities and Investments Commission (ASIC), revealed failures by Money3 to comply with its obligations under the National Consumer Credit Protection Act in relation to 6 people who had taken out loans with the used car financer.

The Court found that Money3 failed to properly assess whether the customers, who were all reliant on Centrelink incomes, could afford the loans they were being given. The loans, which were provided between 2019 and 2021, were often arranged via brokers or car dealers, adding to consumer advocates concerns about sales-driven lending practices in the used vehicle finance market.

The court did not find that Money3 had engaged in systemic misconduct. However, the experience of the 6 consumers is very similar to the numerous Money 3 customers that consumer advocates have assisted over many years.  In the experience of the Indigenous Consumer Assistance Network (ICAN), the majority of people impacted by Money3 are First Nations peoples living in regional and remote Australia who have no access to mainstream credit.

“It was critical that ASIC took this action against Money 3” said Aaron Davis, CEO at ICAN. “For years, we’ve seen Money 3 cause significant harm to First Nations people and people in financial hardship. In our experience, these customers were pushed into unaffordable loans that significantly worsened their financial position causing immense stress. In many of the cases we have seen, the car has broken down soon after purchase and people have been trapped in an unaffordable loan for a car they can no longer drive.”

Consumer advocates praised ASIC for taking enforcement action, highlighting the importance of holding lenders to account under the responsible lending framework to prevent future harm.

“The responsible lending framework is an important consumer protection, particularly for people who experience vulnerable financial circumstances like those given loans by Money3. We commend the action taken by ASIC which listened to our concerns about Money3 and acted on consumer complaints, sending a clear message to other lenders that they will be held accountable for unlawful conduct.” Davis added.

Quotes attributable to Aaron Davis, CEO, ICAN:
“It was critical that ASIC took this action against Money 3. For years, we’ve seen Money 3 cause significant harm to First Nations people and people in financial hardship. In our experience, these customers were pushed into unaffordable loans that significantly worsened their financial position causing immense stress. In many of the cases we have seen, the car has broken down soon after purchase and people have been trapped in an unaffordable loan for a car they can no longer drive.”

“The responsible lending framework is an important consumer protection, particularly for people who experience vulnerable financial circumstances like those given loans by Money3. We commend the action taken by ASIC which listened to our concerns about Money3 and acted on consumer complaints, sending a clear message to other lenders that they will be held accountable for unlawful conduct.”

Quote attributable to Dr Domenique Meyrick co-CEO, Financial Counselling Australia:
“The Court’s finding that Money3 breached responsible lending laws confirms what financial counsellors and consumer advocates have been saying for years. These practices cause real harm to people who can least afford it. We welcome ASIC’s enforcement action and will continue to call for strong oversight of lenders so that people in financial difficulty are not left carrying the burden of poor lending practices.”

Quote attributable to Stephanie Tonkin, CEO Consumer Action Law Centre:
“For years, many callers to our frontlines have told us about blatantly unaffordable loans from Money3 that made their situations much worse.  Money3 brazenly ignored its responsible lending obligations and made dubious assessments for their clients.

“ASIC’s enforcement action stood up to this business that is targeting and profiting from people in precarious financial positions. Consumer advocates across the country have been concerned about Money3’s conduct for years.

” The Federal Court’s finding that Money3 breached responsible lending obligations is welcome and I hope the enforcement hearing in October serves as a warning to other lenders that responsible lending cannot be ignored.”

Quote attributable to Mark Holden, Senior Solicitor, Mob Strong Debt Help
“Lenders need to make reasonable checks for affordability under the National Consumer Credit Laws to avoid consumers being set up to fail.  This is especially important for First Nations consumers where often their most expensive asset is their car.

“We appreciate that the Court found Money3 failed to perform these reasonable checks. We hope this decision will give the credit industry cause to reflect on their practices and whether they too are creating harm.

“We note that ASIC is doing so much more now in its enforcement, and we applaud ASIC’s commitment to motor vehicle loans in their enforcement priorities.”

Quote attributable to Deborah Fisher, Principal Lawyer, Hume Riverina Community Legal Service:
“The Federal Court decision to hold Money 3 accountable for breaching responsible lending guidelines is welcomed by Hume Riverina Community Legal Service. We have worked with many regional clients over the past 10 years who have been impacted by the lending practices of this company – including clients experiencing financial disadvantage and family violence that was compounded and exploited by unfair and unaffordable loans.”

ENDS

Media contact: Mark Pearce  mark@consumeraction.org.au Tel:0413 299 567