Make It Mine hit with $1.25 million penalty for breaching responsible lending obligations

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Appliance rental company Make It Mine has been hit with $1.25 million in penalties for breaching consumer credit laws, including its responsible lending obligations.

The Federal Court handed down the penalty last week following a decision in April that found the business had failed to disclose important information to customers.  

Make It Mine supplies computers and household whitegoods to people on instalment plan contracts.

The court found Make It Mine failed to inform customers of the cash price of the goods they were purchasing via instalments, as well as the total amount of interest to be paid for contracts entered into between 2010 and 2013.

In addition, Make It Mine was found to have failed to make enquiries into the financial position of more than 20,000 customers.

While handing down the penalty, Justice Jonathan Beach said the consumer leasing industry is growing and is capable of “serious adverse impacts on the most vulnerable members of the Australian community”.

“Commercial behaviour leveraged off the vulnerability of others will be closely scrutinised and disciplined,” Beach said.

Make It Mine has promised to work with an external compliance consultant and report back to the corporate watchdog to ensure future compliance with Australia’s consumer credit laws.

ASIC deputy chair Peter Kell said in a statement he hopes the penalty will serve as a warning to those in the consumer lending industry.

“It is imperative that consumer lease providers disclose all information necessary to enable consumers to make an informed decision, and comply fully with their responsible lending obligations – including making proper enquiries about the consumer’s income and living expenses,” Kell said.

“Relying on consumers being able to make payments as long as they are in receipt of government benefits is not a substitute to making these enquiries.”

The maximum penalty for a company breaching responsible lending laws is $1.7 million for each contravention.

Make It Mine founder and chief executive Andre Lang said in a statement he acknowledges the mistakes the company made and takes full responsibility for them.

“When the business first commenced I was 21, inexperienced and we lacked internal expertise,” Lang said.

“We didn’t seek the best available industry advice in relation to our compliance requirements, we made some mistakes, and as a result we are now dealing with the consequences. What I can assure our customers is that these breaches were unintentional and that we take our compliance responsibilities very seriously.”

Lang said Make It Mine is investing “significant resources” into proper systems and procedures, as well as staff training, to ensure the concerns raised by the court are not repeated.

Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany credit licensees have to comply with the National Consumer Credit Protection Act, which is only six years old.

“It’s obviously an increasing area of regulatory focus as they’ve recently amended the Act,” Hogben says.

“Under it, you’re required to do three things. You’re required to make reasonable enquiries about a customer’s financial situation, then verify that, and then make an assessment whether the credit is suitable.”

“The requirement for Centrelink payments means people might need financial assistance, so it’s hard to reconcile on one hand that you’re required to be comfortable about a consumer’s financial situation and they’re suitable – while on the other hand you know their main source of income might be from the government.”

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