A ban given to a man engaged in credit activities at a used vehicle dealership is supported by the Australian Automotive Dealer Association (AADA).
Its chief executive officer David Blackhall says the action by the Australian Securities and Investments Commission (ASIC) is a clear indication ASIC will not tolerate any illegal business practice.
He was commenting on a case involving Adam Edward Greene who wrote and submitted loans for customers buying vehicles from a Cranbourne used car dealership Combined Motor Traders, between 2014 and 2015.
ASIC found that four loans submitted by Greene and approved by Esanda, a division of ANZ, contained false information, and that two of those loans contained false documents that were not given to him by the applicants.
Blackhall says the AADA fully supports ASIC taking this action because it sends a strong message to car dealers around Australia that anyone breaking the rules will be severely penalised.
Recently, a Cairns-based second-hand car dealer was fined $1.2 million by the Federal Court for being in breach of consumer credit laws, responsible lending practices, unconscionable conduct and unjust transactions.
In this case, the dealership was charging up to $990 to facilitate loans of 48% interest for unreliable second-hand cars through the dealership’s own cash broking company.
“These are the very people we want to see banned from this industry and we will have no hesitation to report any form of illegal practices to ASIC,” Blackhall says.
In both cases, neither were members of the AADA, all of whom are new car franchise dealers, Blackhall says.
The main difference between a new car franchise dealer and an independent used car dealer is that new car dealers are governed by a strict set of regulations under their franchise agreements that are carefully monitored by manufacturers, he says.
Manufacturers have systems in place that would immediately detect anything questionable, Blackhall says.
Commenting on the Greene case, ASIC deputy chairman Peter Kell says this is not the first time ASIC has identified this type of conduct with car loans. He warned lenders to be careful at the way they manage the approval of these types of loans, including the way in which car yard employees provide assistance to consumers to obtain finance.
If lenders’ commission structures are encouraging illegal practices, they should make changes, Kell says.
Car dealerships may operate under an exemption commonly known as the ‘point of sale’ (POS) exemption. The POS exemption allows a car dealership to provide assistance to consumers to obtain finance from licenced credit providers. The proceeds of the finance can only be used to pay for goods and services supplied by the dealership.
