ASIC has settled its claim against Volkswagen Financial Services Australia Pty Limited (VWFSA), discontinuing its Federal Court proceeding and accepting a Court Enforceable Undertaking (CEU) from the car financier. The CEU will see VWFSA implement a consumer remediation program which will provide an estimated $4.7 million in redress to approximately 1,800 consumers including:
- $4.1 million in remediation payments;
- $600,000 in interest rate reductions on current contracts; and
- taking reasonable steps to remove default listings from credit bureau files.
VWFSA will proactively contact the consumers who are eligible for the program. These consumers entered into a consumer loan with VWFSA between 1 July 2012 and 30 April 2017 and meet eligibility criteria set out in the CEU.
In addition, the CEU provides an acknowledgement by VWFSA of ASIC’s concerns in respect of VWFSA’s lending practices over the period 1 July 2012 to 30 April 2017.
ASIC has discontinued its civil penalty proceeding in the Federal Court of Australia against VWFSA with each party bearing its own costs.
ASIC’s car finance work
ASIC commenced the proceeding against VWFSA (19-370MR) after concluding its work on BMW Finance Australia (16-417MR) and implementing the ban on flex commissions (18-329MR). ASIC has since commenced a review into the car finance sector focusing on debt collection and hardship, with preliminary findings provided to participants in early 2020.