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ASIC has welcomed a $1.5 million fine against a consumer credit provider and launched civil proceedings against two lenders.
The Federal Court has ordered GE Money to pay a $1.5 million fine for making false or misleading representations to more than 700,000 of its credit card customers.
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The court found that GE Money told some customers in 2012 that they had to consent to receiving invitations to apply for credit limit increases if they wanted to activate their card.
ASIC, which launched legal action against GE Money in October 2013, said the court ruling was a reminder that there are important safeguards to help consumers manage their debts.
Meanwhile, ASIC has started legal action against two Gold Coast payday lenders, Teleloans and Finance & Loans Direct.
A directions hearing will be held in the Federal Court on July 25 after ASIC alleged that the two lenders are avoiding their responsible lending obligations.
“The companies claim they do not have to comply with certain consumer protection laws under the National Consumer Credit Protection Act 2009 because their loans are exempt under a short-term credit exemption,” the regulator said.
“ASIC alleges the companies, based on their business models, do not operate under the exemption and must comply with all of the obligations under the National Credit Act, including specific responsible lending obligations and caps on fees and charges that relate to so-called payday loans.”
Lenders that want to qualify for the short-term exemption can't charge more than five per cent of the loan amount in fees and more than 24 per cent in interest per year, ASIC said.
“ASIC will present to the court five loans where the combined fees and charges of Teleloans and Finance & Loans Direct were as high as 160 per cent of the loan amount.”
[Related: ASIC claims scalp in $660m Banksia collapse]
