Consumer finance: Australian motor finance company's advertising questionned
ASIC has responded to concerns regarding the way Motor Finance Wizard (MFW) advertised the availability of ‘interest free’ finance for the purchase of used motor vehicles between 1 January 2006 and 7 January 2008.
ASIC’s concerns relate to MFW’s conduct prior to 1 July 2010. Before 1 July 2010, ASIC’s jurisdiction over consumer credit was limited to the general consumer protection provisions in the Australian Securities and Investments Commission Act 2001. On 1 July 2010, ASIC became the national regulator for consumer credit.
In 2007 ASIC raised concerns with PR Finance Group Limited (PRFG) in relation to MFW advertisements which included one or more of the following statements: ‘interest free’, ‘Guaranteed interest free’, ‘Interest free finance guaranteed’ and ‘Interest free car loan guaranteed’ (Interest Free Statements).
The advertisements also stated that finance was available to consumers who had credit problems or poor credit ratings and who were unable to obtain finance from other financial institutions (Credit Impaired Statements).
ASIC considered the possibility that the advertisements may amount to conduct that was potentially misleading and deceptive and that there may have been instances of consumers being provided with unaffordable credit.
ASIC expressed its concerns to PRFG during the course of its investigation and based on discussions with PRFG, the following steps were implemented with respect to the MFW business:
- MFW ceased publishing the Interest Free Statements and Credit Impaired Statements in all its advertising;
- MFW ceased offering interest free finance, and
- MFW reviewed its credit assessment criteria to avoid providing consumers with unaffordable credit
In addition, PRFG has made ex-gratia payments to some customers.
ASIC acknowledges the cooperative and constructive approach taken by PRFG in responding to ASIC’s concerns.
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