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Credit companies taken to court over failure to cooperate with AFCA
The corporate regulator has announced that it’s suing two credit providers for failing to take reasonable steps to cooperate with AFCA.
Credit companies taken to court over failure to cooperate with AFCA
The corporate regulator has announced that it’s suing two credit providers for failing to take reasonable steps to cooperate with AFCA.
ASIC has alleged that General Commercial group and Eden Capital (formally Southside Lending) repeatedly engaged in disruptive, aggressive and uncooperative behaviour towards the Australian Financial Complaints Authority (AFCA), with the intent of disrupting AFCA’s complaints handling and investigation processes and undermining the effectiveness, efficiency and fundamental principles of the AFCA scheme.
Since 6 April 2019, reforms introduced as a result of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Royal Commission mean that a failure to cooperate with AFCA is a civil penalty offence with significant penalties.
ASIC also alleged that General Commercial and Eden Capital’s conduct amounted to a breach of their obligations as credit licensees to act, efficiently, honestly and fairly.
According to ASIC deputy chair Sarah Court, compliance with AFCA determinations is a critical part of a licensee’s obligations. It ensures that consumers have access to independent resolutions that can be handled in a timely manner.
“ASIC expects credit licensees to cooperate with AFCA in resolving a complaint under the AFCA scheme and to comply with the conditions of their licence,” Ms Court said.
According to ASIC, the misconduct included:
- Failure to pay an AFCA determination to complainants in the amount of $11,492.71.
- Threatening AFCA complainants with legal proceedings unless they withdrew their AFCA complaint.
- Commencing proceedings against complainants because they lodged a complaint with AFCA.
- Making complaints about the conduct of AFCA staff members.
- Threatening to withdraw from the AFCA scheme or to not renew their AFCA membership.
- Threatening to bring proceedings against AFCA staff members who were investigating complaints.
- Commencing proceedings against an AFCA staff member (seeking $25,000 in damages).
- Repeated failures to identify, locate and provide to AFCA documents and information requested for the purposes of resolving the complaints.
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