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The lender’s head has been found guilty of failing to give effect to AFCA determinations, thus breaching the National Consumer Credit Protection Act.
According to ASIC, these proceedings began when Lightspeed Finance provided a client with a loan that was considered to be unaffordable.
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As per its website, Lightspeed Finance offers term business loans that are said to be typically one to 12 months in duration, alongside second mortgage loans, construction finance and bridging loans.
On 4 December 2018, AFCA ruled, following a customer complaint over this loan and its affordability, that Lightspeed Finance pay the loan debt, including interest, owed by the client to the lender.
It was ruled that this sum be paid by Lightspeed Finance prior to the client repaying the initial loan amount.
Less than a year later, on 12 July 2019, AFCA made a second determination in favour of the same client, which is said to have “reduced the consumer’s liability even further”.
Mark James Fitzpatrick was the director of the lender during both of these determinations.
ASIC has stated that both of these determinations were accepted by the consumer and were binding on Lightspeed Finance.
However, on 16 April 2021, the commission commenced proceedings against Lightspeed Finance, alleging that the lender failed to give effect to both of these determinations and that Mr Fitzparick was knowingly involved in these breaches.
Justice Roger Derrington agreed with ASIC’s allegations earlier this week (4 May) in Federal Court, observing that both Mr Fitzpatrick and Lightspeed Finance failed to meet the obligations of their credit licence by refusing to comply with the authority’s determinations.
As a result of this breach, Mr Fitzpatrick has been ordered to pay $220,000.
Since March 2019, the maximum penalty for failing to cooperate with AFCA is an individual fine of $1.05 million and a company fine of $10.5 million.
ASIC deputy chair Sarah Court said on the ruling: “When an external dispute resolution decision is made, ASIC expects the determination will be carried out.
“Complying with AFCA determinations is a critical part of a licensee’s obligations and ensures that consumers have access to a dispute resolution system that works.”
The ruling comes less than a month after the corporate watchdog announced that Shiwei He, a former NSW-based broker, was released without conviction after pleading guilty to a breach of the National Consumer Credit Protection Act.
As per ASIC, prior to the court’s decision, Mr He entered into recognisance of good behaviour, valued at $5,000, for a period of two years.
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