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ISCOVER
Jessica Darnbrough
A couple of Sydney-based brokers, who were found to have engaged in unconscionable conduct by ASIC, have discontinued their appeal to the Federal Court of Australia and have been ordered to pay ASIC’s costs.
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The appeal arose from proceedings which ASIC commenced in relation to five clients of Australian Lending Centre Pty Ltd and Sydney Lending Centre Pty Ltd, owned and controlled by Christopher John Riotto, relating to conduct that occurred between 2005 and 2008, prior to the introduction of the current consumer credit laws which ASIC now regulates.
ASIC and Australian Lending Centre have also agreed to impose a condition on Australian Lending Centre’s Australian credit licence for the appointment of an independent compliance expert to conduct reviews of Australian Lending Centre’s business (including reviews of client files) and to regularly report to ASIC on its review. Sydney Lending Centre has not applied for a licence under the new credit regime.
Further, Australian Lending Centre has agreed to appoint an additional responsible manager to their credit licence. The responsible manager will need to demonstrate that they have the requisite knowledge and experience to operate a credit licence.
In February 2012, the Federal Court found that Australian Lending Centre and Sydney Lending Centre engaged in unconscionable conduct by having clients sign broking contracts for business loan when they knew clients wanted personal loans.
In addition, one of the companies secured a loan over a client's house when it was known the client could not afford the repayments, and in another case, the brokers in question are said to have exploited the clearly identifiable disability of a client by having him sign a broking contract and loan with an interest rate of 5 per cent per month, secured over his only asset.
“The appointment of an independent compliance expert will help ensure that Australian Lending Centre is complying with its obligations under the law, and that people are not being put into loans that deprive them of important rights and protections,” ASIC commissioner Peter Kell said.
