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Despite showing little mercy to brokers for minor transgressions, ASIC has allowed a collections agency in breach of NCCP regulations to continue operating, with no fines and a ‘slap on the wrist’, according to one prominent lawyer.
Tru Blu Collections Services Pty Ltd attracted the attention of ASIC in October 2012, after purchasing a loan book consisting of 3,200 credit contracts from pay-day loan companies.
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As the purchaser of the loan book, the rights and obligations of the credit contracts were assigned to Tru Blu as a credit provider – a role the company was not licensed in.
Speaking with The Adviser, partner at Gadens Lawyers and NCCP expert Jon Denovan said the business owners obviously hadn’t done their homework.
“Anyone who buys credit contracts in order to collect them needs a credit licence,” Mr Denovan said. “Every man and his dog knows that, so it looks like these guys got out of bed one day and decided that’s what they want to do.”
However, Mr Denovan was surprised by the lack of action on ASIC's part.
“ASIC have basically said they can keep doing what they’re doing – but they need to get a license eventually,” Mr Denovan said.
Not only did ASIC not fine or ban Tru Blu, the regulator also did not order the company to offload the offending credit contracts. ASIC instead accepted an enforceable undertaking which requires Tru Blu to:
- cease any credit activity, other than the continued receipt of established periodic payments;
- require that its directors and staff complete training to ensure future compliance with NCCP;
- engage an independent consultant to review Tru Blu's compliance with the credit legislation and any credit licence conditions. The independent consultant is to report the outcome of its reviews regularly to ASIC for the next two years; and
- when seeking to recover a fee or charge payable on early termination or repayment of a credit contract, ensure the amount does not exceed the amount of Tru Blu's loss arising from the early termination or repayment
“It’s amazing ASIC has been so kind to them really; if anyone set up a home loan company and didn’t have a licence, you’d be looking at much, much worse,” Mr Denovan told The Adviser.
“How come some brokers receive a six-month ban from conducting any sort of business, other brokers get rapped over the knuckles for an incorrect credit assessment – yet these guys go and buy credit contracts and ASIC says ‘never mind, keep going – but keep working toward that licence’.”
ASIC deputy chairmen Peter Kell said the regulator had taken “appropriate action”.
“It is the responsibility of those engaging in credit activities to ensure that they are fully aware of their obligations under the credit legislation and are licensed. Where this is not the case, we will take appropriate action,” Mr Kell said.
