Australian Securities and Investments Commission v Channic Pty Ltd (No 4) [2016] FCA 1174

Australian Securities and Investments Commission v Channic Pty Ltd (No 4) [2016] FCA 1174

Cash Brokers contravened the responsible lending and disclosure provisions because its preliminary assessment process relied on inadequate credit application forms and a standardised expenses model rather than reasonable inquiries and verification of each consumer's actual financial situation, and it did not...

Source-derived case information.

Jurisdiction
Australia
Judgment Date
30 September 2016
Procedural Posture
Regulator and Consumer Protection Civil Proceeding Concerning Consumer Credit Contracts and Credit Assistance / Reasons for Judgment on Liability and Related Findings; Proposed Declarations and Orders, Costs and Pecuniary Penalties Reserved for Later Determination
Outcome
ASIC substantially succeeded on liability; the Court found contraventions by Cash Brokers Pty Ltd, Channic Pty Ltd and Mr Hulbert, found unconscionable conduct and unjust credit contracts, with formal declarations, costs and pecuniary penalties left for later determination.
Legal Topics
['responsible Lending Obligations' 'credit Assistance' 'credit Suitability Assessments' 'unconscionable Conduct' 'unjust Credit Contracts' 'accessorial Liability' 'pecuniary Penalties']
['consumer Law' 'consumer Credit' 'financial Services Regulation'] ['responsible Lending Obligations' 'credit Assistance' 'credit Suitability Assessments' 'unconscionable Conduct' 'unjust Credit Contracts' 'accessorial Liability' 'pecuniary Penalties']

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Procedural Posture

Regulator and Consumer Protection Civil Proceeding Concerning Consumer Credit Contracts and Credit Assistance / Reasons for Judgment on Liability and Related Findings; Proposed Declarations and Orders, Costs and Pecuniary Penalties Reserved for Later Determination

Legal Issues

  1. 1 ['Whether Cash Brokers Pty Ltd contravened ss 113, 114, 115, 116, 117, 118, 121 and 123 of the National Consumer Credit Protection Act 2009 (Cth) in providing credit assistance to consumers.' 'Whether Channic Pty Ltd contravened ss 128, 130, 131 and 133 of the National Consumer Credit Protection Act 2009 (Cth) in entering credit contracts with consumers.' 'Whether Channic Pty Ltd engaged in unconscionable conduct in contravention of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).' 'Whether the credit contracts were unjust within the meaning of s 76 of the National Credit Code.' 'Whether Colin William Hulbert was knowingly concerned in the contraventions by Channic Pty Ltd and Cash Brokers Pty Ltd.']

Ratio Decidendi

Cash Brokers contravened the responsible lending and disclosure provisions because its preliminary assessment process relied on inadequate credit application forms and a standardised expenses model rather than reasonable inquiries and verification of each consumer's actual financial situation, and it did not properly assess whether the proposed Channic contracts met consumers' requirements and objectives or were unsuitable. Channic contravened its responsible lending obligations because it relied on Cash Brokers' flawed material, did not independently make reasonable inquiries or verification, and entered credit contracts that were unsuitable for the consumers. Channic's entry into the...

Court Disposition

ASIC substantially succeeded on liability; the Court found contraventions by Cash Brokers Pty Ltd, Channic Pty Ltd and Mr Hulbert, found unconscionable conduct and unjust credit contracts, with formal declarations, costs and pecuniary penalties left for later determination.

Orders

  • ['The applicant is directed to submit to the Court within 14 days proposed declarations and orders to be made in conformity with the findings in the reasons for judgment published today.' 'The costs of and incidental to the proceeding are reserved for later determination.' 'The parties are directed to file...