ICAN has welcomed ASIC’s enforcement action against used car lender Money3. ASIC has issued Court proceedings against the lender claiming that it did not do the financial checks needed to ensure the loans they gave were affordable to the borrowers. ASIC also claims that Money3 staff were not properly trained to follow the credit laws that require Money3 and other credit providers to lend responsibly. The case relates to loans that Money 3 gave to people during May 2019 and February 2021.
ICAN, along with consumer advocates across the country, have been pushing for action against this lender for more than two years after receiving a significant number of complaints against it. “We saw more and more people coming to us with loans from Money3 which they could not afford to pay. Within four months we had lodged complaints with ASIC on behalf of 10 people. The complaints have continued with Money 3 consistently being among the top private creditors reported in our case work.” says Operations Manager, Jillian Williams.
Financial Counsellor, Alex Price-Busch says, “One of the most common issues I see in my role are people suffering from financial hardship and stress due to an unaffordable car loan. A car is the most expensive item many of our clients will purchase in their life, and more often than not, they are taken advantage of by dealerships who sell them a ‘lemon’ and lenders who provide loans they can’t afford. This is profoundly disempowering for people as it impacts their ability to get to work; get kids to school; and attend medical appointments. The heartbreak of this exploitation and the lack of recourse available is a real punch in the guts that impacts peoples’ ability to engage with the financial system as people don’t feel it’s possible to improve their circumstances. When it comes to First Nations peoples, who are the majority of people we see impacted by dodgy dealers and lenders, this makes closing the gap that much harder. I am pleased to see ASIC has listened to our concerns and taken court action against Money3.”
ICAN Financial Counsellor, Zack Wildy, helped an elderly woman to get out of her loan with Money3 and obtain a refund after they financed the purchase of a lemon vehicle from a Cairns dealership. “She had bought the car for $8000 in April, and by September, it had broken down completely. She needed the car to drive her husband to his medical appointments, and their sole income was the age pension. Despite the fact she could not afford the loan in the first place, she had managed to pay Money3 more than $11,000 to the loan, including $5000 from stolen wages payments that she had received. When we highlighted what a poor deal this was, Money3 agreed to waive the remaining debt and refund her $7000.
Zack says it’s not always easy to get this kind of outcome from Money3. “We have had several cases where Money3 have refused to resolve the complaint quickly or appropriately. This has meant we have had to take the complaint to AFCA (Australian Financial Complaints Authority), which can be time consuming and stressful for our clients. The action by ASIC sends a strong and important message to used car lenders like Money 3 that the regulator is watching and encourages them to act appropriately when there are disputes.”
Car finance companies, like other lenders, are required under Australian credit laws to assess the ability of someone to repay the loan before they provide it. The loan must meet the borrower’s needs and must be affordable. Used car dealers are required to sell vehicles that are of acceptable quality under Australian Consumer Law.
For more information on what to look out for when you’re thinking about using a car loan to buy a car, go to ASIC’s MoneySmart website – Car loans: How to compare car loans and get the best deal.
ASIC also has a short video about buying cars called ‘Take a minute with your money’ that you can watch here