BMW Australia Finance to repay millions to customers after ASIC finds it breached responsible lending provisions
Updated
Car loan provider BMW Australia Finance will refund millions of dollars worth of loans to thousands of customers after it was found to have breached responsible lending provisions.
Key points:
- BMW Australia Finance is forced to repay $77 million after being found to have breached responsible lending provisions
- It is believed to be Australia's largest ever consumer pay-back scheme
- The affected customers have car loans for a wide range of cars and brands, new and secondhand
The refunds are part of an enforceable undertaking agreed to by the company in response to an investigation by the Australian Securities and Investments Commission (ASIC).
The total cost of the package is $77 million, which includes $14.6 million in direct remediation to customers, $7.5 million in cuts to interest rates of current loans, and $50 million in loan write-offs.
BMW Finance has also agreed to pay $5 million towards consumer advocacy and financial literary initiatives.
The refunds will apply to at least 15,000 customers who have suffered financial hardship as a result of using BMW finance between January 2011 and August 2016.
It is believed to be Australia's largest ever consumer pay-back scheme.
ASIC deputy chair Peter Kell said the company had a sales-driven culture and it "failed to comply with the requirements of the credit laws".
"We have many examples through BMW Financial Services and Alphera Financial Services, which is owned by BMW," Mr Kell said.
"This is not just about BMW cars, it affects all makes and models — both new and used. So, customers right across the spectrum.
"We saw a 76-year-old man who had a $50,000 loan, almost twice the value of the car that he purchased, and yet his ability to repay was not based on his real income but on projected earnings.
"There are other cases where you had single parents with dependent children who were really going to have difficulty paying back their loan, who were lent large amounts of money.
"In some circumstances we had the expenses that were entered into the loan contract set at zero."
The company will also remove default listings and buy back all debt sold to third parties to ensure the written-off loans are not subject to further debt collection activities.
The remediation program will be run by an independent consultant who will report to ASIC on its progress.
BMW Australia has been contacted for comment.
BMW Finance provides motor vehicle finance to consumers both directly as well as through its network of car dealers.
The affected customers have car loans for a wide range and variety of cars and brands, both new and second hand.
Are you a customer who has been affected?
Customers who think they might have experienced hardship as a result of entering into their loan are encouraged to immediately register for the remediation program by calling 1800 448 225 or emailing BMW:- BMW: CustomerFirstAUS@bmwfinance.com.au
- Alphera: CustomerFirstAUS@alphera.com.au
- MINI: CustomerFirstAUS@minifinance.com.au
Topics: consumer-protection, consumer-finance, business-economics-and-finance, australia
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