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A major lender has agreed to pay $5 million in penalties after its former finance subsidiary Esanda approved suspected fraudulent car loans from brokers.
The Australian Securities and Investments Commission (ASIC) has announced that a settlement has been reached with ANZ after it admitted 24 breaches of responsible lending provisions.
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ASIC had begun civil proceedings in the Federal Court against ANZ after alleging that its former car finance subsidiary, Esanda, “did not take reasonable steps” to verify customers’ financial situations submitted in 12 car loan applications where “it had reason to doubt the reliability of information from the particular broker businesses”.
The third-party businesses involved in these cases are: United Financial Services, Best Buys Auto, Motorcycle Finance and Insurance, and Combined Motor Traders.
The two parties have now jointly submitted a Statement of Agreed Facts and Admissions to the Federal Court, which, pending approval, will require the lender to pay a total of $5 million in remediation to approximately 320 eligible customers.
However, the penalty amount payable by ANZ will be determined by the court. The Federal Court has listed the proceedings for a first Case Management Hearing on 2 February 2018.
Eligible customers will also be offered the option of entering into a new loan, and ANZ will offer refunds to customers who had their cars repossessed and remove any default listings resulting from the loan.
The major bank has emphasised that it has disaccredited the brokers and car dealers responsible for submitting the 12 loan contracts and no longer accepts loan applications from them.
It added that it has since “significantly increased” the supervision and training of asset finance brokers.
In response to the findings, ANZ Australia group executive Fred Ohlsson said that the lender is cooperating with ASIC to take appropriate steps to prevent such breaches from occurring in the future.
“ANZ has worked closely with ASIC on its investigation of this matter,” Mr Ohlsson said.
“We take our responsible lending obligations seriously and we have since taken steps to strengthen our ability to prevent and detect fraud by third parties.”
ANZ will also pay $390,000 of ASIC’s costs, subject to court approval.
[Related: Convicted loan writer permanently banned]
