ASIC cracks down on misleading car finance ads, cold calling scam
Tuesday, June 26, 2012/
The corporate watchdog is on the prowl. It has shut down misleading car finance advertising, along with a cold calling scam that ended up taking more than $38,000 in investor funds.
The Australian Securities and Investment Commission said in a statement yesterday Money3 had agreed to change its car finance advertising following concerns raised by the regulator.
The company, which specialises in providing small loans along with car leasing and finance, said in its ads that “When everyone else says no! We say yes! No application refused”.
ASIC said this was misleading because the company didn’t provide finance to all applicants who had been refused by other lenders, and that if the company did actually do that, it would be in breach of the responsible lending obligations of the new Consumer Credit Protection laws.
Money3 chief executive Robert Bryant told SmartCompany this morning he agrees the advertising – in its previous form – was misleading.
“I get that, I understand that and we should have realised what was happening. When we did, we had it removed immediately,” he says, adding that he was actually concerned about the statement for a while.
“Money3 is committed to responsible lending obligations, as is ASIC, and we never intended that there would be confusion in our advertising and once aware of it, withdrew the confusing advertising immediately.”
ASIC commissioner Peter Kell said in a statement the problem was the advertising suggested an applicant would receive funding regardless of their financial circumstances.
Money3 has now removed the statement “no application refused” and has withdrawn all advertising containing the statement.
“ASIC will persist in taking action against misleading advertising to ensure consumers are given a realistic view of the financial service or product being sold,” Kell said.
“While advertising can help people make financial decisions, it’s important that information is accurate. Ultimately, we want to help consumers make informed and confident financial decisions.”
Meanwhile, ASIC also said in a statement yesterday that some investors in City Index Australasia will be able to get their money back following action in the Federal Court taken against the company, and its director, Blair Travers – who has been banned from working in the industry for 10 years.
The regulator said about $38,000 worth of investor funds will be distributed on a pro-rata basis, and it expects about 62 cents in the dollar will be returned to the five investors.
City Index Australasia conducted a cold calling scam in 2011 which promised investments in financial products but led investors to false information on a website. The company never held a financial license.
The Federal Court made declarations the company had made false representations to investors, and engaged in dishonest and misleading conduct. It said the company made false statements it was associated with City Index Australia, which is an unrelated license holder, while it also said it was a successful, established and reputable provider of financial services.
The company said returns would be generated through investments in contracts for difference, spread betting and foreign exchange markets.
Commissioner Kell also said the regulator will continue to crack down on dodgy operators.
‘While victims of CIA [City Index Australasia] will receive some compensation following the urgent court orders we obtained in September last year to freeze investor funds, the scam will also be shut down and its operator banned from the financial services industry.”
“This is crucial in preventing further people from falling victim to these scams.”