Borrow
400k Aussies caught up in shonky car loan schemes
Two banks are in hot water after they allegedly colluded with car dealers to hit consumers with “unfair” high-interest loans on their purchase of a vehicle.
400k Aussies caught up in shonky car loan schemes
Two banks are in hot water after they allegedly colluded with car dealers to hit consumers with “unfair” high-interest loans on their purchase of a vehicle.
According to a statement from Maurice Blackburn, “borrowers were not told that Westpac and St.George had a cosy deal with car dealers that allowed the car dealers to hike up the interest rates on car loans from a ‘base rate’ in order to earn substantial ‘flex commissions’.”
The law firm said it has commenced a class action in the Victorian Supreme Court about the matter, which saw consumers charged more than three times the base interest rate set by Westpac and St.George in some cases.
In many cases, higher interest rates weren’t determined by objective criteria such as credit risk.
Instead, the law firm said higher rates “were crudely used to boost the profits of care dealers and Westpac and St.George”.
It’s reported that flex arrangements were a feature of the industry for more than 25 years before ASIC finally outlawed the practice in 2018.
Not long after, the final report of the financial services royal commission also condemned the practice, highlighting “the dealer’s interest in securing the highest rate possible is obvious”.
It read: “To the borrower, the dealer might have appeared to be acting for the borrower by submitting a loan proposal on behalf of the borrower. The borrower was given no indication that in fact the dealer was looking after its own interests.”
According to Maurice Blackburn’s national head of class actions, Andrew Watson, hundreds of thousands of Australian car purchasers have been affected by the practice.
The lawyer explained how “the expectations of consumers were that the dealer was a conduit for, but was not setting, the interest rate. It is safe to assume that most consumers understood that the roles of car dealers and lenders were distinct.”
But he said the Westpac and St.George arrangement actually rewarded car dealers for going above and beyond — and gouging higher interest rates out of consumers.
“This case will seek to prove that Westpac and St.George failed to comply with their obligations under consumer credit protection laws and that this failure caused substantial losses for many consumers,” he noted.
In some cases, consumers were slugged with interest rates that were more than 10 per cent above the underlying base rate offered by the bank, Mr Watson flagged, with a number of consumers not even told of the loan’s interest rate until after they agreed to purchase the car.
Maurice Blackburn has revealed that there appears to be approximately 400,000 Australians who have been impacted by such schemes. However, the current class action will be restricted to anyone with a Westpac or St.George car loan from 1 March 2013 to 31 October 2018.
RELATED ARTICLES
-
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
-
Trust is the new yield: Why brokers win when credibility compounds
-
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
About the author
About the author
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
