Today, the corporate regulator ASIC announced it is taking action against consumer leasing giant Radio Rentals after the company admitted to breaching responsible lending laws.
Consumer Action Law Centre CEO Gerard Brody said the Centre has received numerous complaints about Radio Rentals’ lending practices in the past, and welcomed ASIC’s enforcement action.
“This is not the first time Radio Rentals has been in the spotlight for the wrong reasons. Our lawyers have assisted numerous people with responsible lending complaints against Radio Rentals. This is a company that has profited from Australians who can least afford it.”
ASIC has lodged civil penalty proceedings with the Federal Court of Australia today seeking a penalty of $2 million for the breaches, which relate to over 270,000 leases entered into between 1 January 2012 and 1 May 2015. ASIC has also accepted an Enforceable Undertaking that requires Radio Rentals to refund or write-off approximately $6.1 million in default fees and charges.
However, Mr Brody said that affected customers were likely to be entitled to further compensation than the refunds on offer under the remediation scheme.
“If someone has a Radio Rentals lease that they have struggled to repay, then we encourage them to seek additional compensation from Radio Rentals. If they are unhappy with Radio Rentals’ response, they can contact the Credit and Investments Ombudsman to make a complaint.”
Legislation is due to be introduced in 2018 to reform the consumer leasing industry, which would include limiting consumer lease repayments to 10% of a person’s net monthly income.
“Unfortunately, irresponsible lending is a systemic issue in the consumer leasing industry. We strongly support Government reforms planned for 2018, which will improve lending practices and make these leases more affordable for everyday Australians,” said Brody.
Consumer Action is available for comment on the ASIC action and upcoming reforms.
Consumer Action Law Centre, ‘Radio Rentals sued over irresponsible ‘Rent Try Buy’ contracts’, 24 March 2017 – https://consumeraction.org.au/radio-rentals-sued-irresponsible-rent-try-buy-contracts/.
Marty Silk, Sydney Morning Herald, ”Rent now, pay forever’? Radio Rentals faces class action over misleading consumers’, 29 March 2017, http://www.smh.com.au/business/banking-and-finance/rent-now-pay-forever-radio-rentals-faces-class-action-over-misleading-consumers-20170329-gv8uss.html.