ASIC sends warning to irresponsible lenders

The Consumer Action Law Centre welcomes the move by ASIC to cancel the credit licence of Zaam Rentals Pty Ltd (Zaam Rentals), a Victoria-based household goods rental company which targeted poorer areas in Mildura and surrounding areas in NSW, including Indigenous communities.

‘Consumer Action is pleased to see ASIC take strong action against credit licence holder Zaam Rentals – the cancellation of Zaam Rentals’ credit licence should act as a warning to other credit providers that responsible lending laws aren’t to be taken lightly and that breaching these laws can have severe consequences for a business.’

‘Our case work suggests that there are other businesses operating in the credit sector that have a very similar modus operandi to Zaam. We look forward to ASIC applying the same standards across the market and taking action where responsible lending laws have been breached.

‘It’s significant that ASIC has shown a willingness to cancel a credit licence and we encourage it to take similar action where rogue behaviour is evident.  Too often, licensing decisions seem to focus on the financial well-being of the business owner without equivalent consideration of the significant costs unfair business models or practices can impose on often vulnerable consumers.’

The Murray Mallee Community Legal Service should also be congratulated for bringing Zaam’s behaviour to the attention of ASIC, the media, and its local community. Its hard work advocating for Zaam’s clients is a clear illustration of the value of community legal centres and their strong connection with local communities.’

The above comments can be attributed to Consumer Action Law Centre co-CEO Catriona Lowe and respond to ASIC’s media release ASIC takes action against Zaam rentals, cancelling its licence and banning its directors:

ASIC has cancelled the credit licence of Zaam Rentals Pty Ltd (Zaam Rentals), a Victoria-based household goods rental company which targeted poorer areas in Mildura and surrounding areas in NSW, including Indigenous communities.

ASIC has also taken action against the director of Zaam Rentals, Akash Bhardwaj and the former director, Amandeep Sabharwal banning them from engaging in credit activities for 6 years and 4 years respectively.

An ASIC investigation found between 4 December 2010 and 14 September 2011 Zaam Rentals did not comply with responsible lending obligations set out in the National Consumer Credit Protection Act 2009 (National Credit Act).

Specifically, ASIC found Zaam Rentals:

  • did not make reasonable inquires about the requirements and objectives of those entering into the contracts
  • did not make reasonable inquiries about their financial situation
  • did not take reasonable steps to verify their financial situation
  • did not give consumers a credit guide, and
  • did not make the necessary disclosures in the rental contract

‘In deliberately targeting vulnerable people who had limited understanding of the contracts they were signing, and little capacity to meet repayments, Zaam Rentals and its directors have acted unconscionably,’ ASIC Commissioner Peter Kell said.

‘This behaviour will not be tolerated. The responsible lending provisions are a key element of the national credit laws and ASIC has been and will continue to be very active in monitoring compliance and investigating reports of breaches of the requirements.

‘I encourage consumers who have complaints about their dealings with Zaam Rentals to contact the Financial Ombudsman Service on 1300 780 808. Consumers should be aware that any complaint must be lodged while Zaam Rentals is a member of this service. ASIC has required Zaam Rentals to maintain its membership of an external dispute resolution service for the next 12 months.’

Zaam Rentals, Mr Bhardwaj and Mr Sabharwal have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decisions.


The National Credit Act requires credit licensees to meet responsible lending conduct obligations.

The key responsible lending obligation is that credit licensees must not suggest, assist with or provide a credit product that is unsuitable for a consumer. Before a credit licensee suggests, assists with, or provides a new credit contract or lease to a consumer, the credit licensee must:

  • make reasonable inquiries of the consumer about their requirements and objectives in relation to the credit contract
  • take reasonable steps to verify the consumer’s financial situation
  • based upon these inquiries, assess whether the credit product is unsuitable for the consumer and only proceed if the credit product is not unsuitable, and
  • give the consumer a copy of the assessment if requested

A contract will be unsuitable if the consumer would be unable to repay it without substantial hardship or it will not meet the consumer’s requirements or objectives. The requirements also apply where the credit limit on an existing contract is being increased.

Zaam Rentals’ credit licence is cancelled however they must maintain an internal dispute resolution procedure, and remain a member of an approved external dispute resolution scheme. They also need to have adequate compensation arrangements in accordance with the National Credit Act until 15 January 2014.