ASIC doubles down on ‘Predatory Lending Practices’ with civil penalty action against Money3 Loans

ASIC has commenced civil penalty proceedings in the Federal Court against Money3 Loans Pty Ltd, alleging breaches of its responsible lending obligations related to the purchase of second-hand vehicles.

Predatory lending and high cost credit targeting vulnerable consumers is one of ASIC’s 2023 Enforcement Priorities, and this action follows recent hefty penalties against ClearLoans for breaches of consumer credit laws (albeit in an effectively undefended judgment).

In the Federal Court action, ASIC alleges that Money3 entered into loan contracts with vehicle purchasers who were receiving Centrelink payments as their sole income, or were on low incomes. ASIC further alleges that significant fees were incurred for the vehicle loans, often comprising more than 25% of the entire loan amount.

The spectre of its failed action in respect of alleged breaches of responsible lending by Westpac in the infamous “Wagyu and Shiraz” case still looms large over ASIC, which is still reeling from the exit of its former Chair and Deputy Chair, the upheaval of Joe Longo’s chairmanship and the current restructure.  However, the Money3 case is a long way removed from the Westpac case, both in terms of the legal questions, defendant and the conduct.  

ASIC’s Enforcement and Regulatory Update for the first quarter of 2023 reported over $30M in penalties in the predatory lending space and highlighted the outcome against ClearLoans.  Deputy Chair Sarah Court’s recent rhetoric is a clear signal that ‘predatory lending practices or high cost credit targeting vulnerable consumers including conduct by fringe or unlicensed lenders’ will remain a target and further actions will follow.

ASIC’s media release for theMoney3 case is available here.

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