ANZ Settles $85 Million Dispute in Car Loan Commission Case
ANZ Settles $85 Million Dispute in Car Loan Commission Case
1
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
A significant settlement has been reached by financial powerhouse ANZ, totaling $85 million, concerning practices in its former car financing division.
The settlement puts an end to allegations surrounding ANZ's controversial loan commission strategy, which purportedly exploited consumers purchasing vehicles.
Bringing this issue to light, prominent law firm Maurice Blackburn Lawyers had initiated multiple class actions, implicating financial institutions including ANZ, Westpac, St George Finance, and Macquarie Leasing. The accusations centered on the employment of "flex commission" systems, which the Australian Competition & Consumer Commission (ACCC) prohibited in November 2018.
In essence, flex commissions permitted car dealerships to control the interest rates and terms of the vehicle loans they arranged. According to Maurice Blackburn, these provisions incentivized dealerships to inflate interest rates and prolong loan durations to secure more substantial commissions from banks.
"In our role as representatives of the affected group members, we contend that these commissions were not only unfair but also unlawful, leading consumers to incur inflated loan interest costs," reads a statement on Maurice Blackburn's website. "Compensation and other forms of redress are sought for those adversely impacted."
Rebecca Gilsenan, the national head of class actions at Maurice Blackburn, hailed the ANZ settlement as a transformative outcome for impacted customers. "This result represents a crucial victory for borrowers who were left paying undue amounts on their car loans," Gilsenan announced on Friday.
Gilsenan emphasized the expectation of borrowers that dealers, distinct from lenders, should provide the most competitive loan rates. She noted the positive rectification by ANZ as they accorded fairness to their past customers.
This outcome, originating from a report by NewsWire, signals the end of a lengthy legal confrontation for ANZ, occurring alongside forthcoming proceedings involving Westpac and St George Finance and Macquarie Leasing at the Victorian Supreme Court, scheduled to resume late October.
Despite agreeing to the settlement, ANZ clarified that it does not admit liability within any of the cases it resolved. "The Esanda class action concerned flex commissions applied to Esanda car loans arranged by dealers from 2011 till the end of March 2016," mentioned a statement from ANZ. Notably, the bank divested its Esanda Dealer Finance holdings in 2016, showcasing its departure from this business model.
Further, ANZ disclosed a $14 million settlement concerning another legal issue related to superannuation fund investments through its formerly owned entities, OnePath Custodians and OnePath Life.
Conclusively, the described settlements require approval from the court, maintaining ANZ's consistent stance of no liability affirmation. Responses from Westpac and Macquarie Bank remain awaited.
Published:Sunday, 6th Oct 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating financial risks associated with high debt-to-income (DTI) loans. Effective from 1 February 2026, APRA will implement a 20% cap on new loans where the borrower's debt exceeds six times their income. This measure applies to both owner-occupied and investor loans, reflecting a proactive approach to maintaining financial stability in the housing market. - read more
According to Canstar's latest Consumer Pulse Report, the cost of housing remains the foremost financial concern for Australians as they head into 2026. Despite three cash rate cuts in the past year, 21% of Australians identify housing expenses, including mortgages and rents, as their primary financial worry. This marks the fourth consecutive year that housing costs have topped the list of financial concerns, with the percentage more than doubling over the past five years. - read more
The Australian personal loan market is undergoing a significant transformation, with digital lenders now accounting for over 40% of new loan originations. This shift is driven by the rapid digitalisation of loan processes, offering borrowers faster approvals and broader eligibility criteria. - read more
Stepping into the realm of loans and finance can be a daunting endeavor, but it all begins with a solid foundation in personal budgeting. Understanding how to manage your money effectively is not just a skill—it’s a crucial aspect of securing financial stability and achieving peace of mind. By tuning in to your finances and preparing a thought-out plan, you’re setting the stage for a well-informed loan application process. - read more
When considering personal finance in Australia, personal loans are a handy resource for achieving various financial goals, from consolidating debt to funding a major purchase. Yet, it's essential to approach this financial tool with caution and understanding. Proper comparison of personal loans can be the difference between a financial stepping stone and a stumbling block. - read more
Financial hardship occurs when an individual is unable to meet their financial obligations due to a variety of circumstances. This could stem from a loss of income, unexpected expenses, or rising living costs that outweigh financial resources. - read more
Need Help Finding a Loan?
Find out now if you qualify and compare
rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation. We respect
your
privacy.
Knowledgebase
Compound Interest: Interest calculated on the initial principal, which also includes all accumulated interest from previous periods.
