Enforcement Action Taken Against Money3

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Rusted and broken down car in lightly wooded area

The Australian Securities and Investments Commission (ASIC) has issued against used car lender Money3, claiming that it failed to adequately train staff on relevant credit laws and did not ensure proper financial checks on the affordability of the loan were made.

After more than two years of receiving complaints against Money3, consumer advocacy groups, including the Indigenous Consumer Action Network (ICAN), are happy that something is being done.

From ICAN’s original article , posted 18/05/2023, found here:

Financial Counsellor, Alex Price-Busch says, “One of the most common issues I see in my role are people suffering from financial hardship and stress due to an unaffordable car loan.  A car is the most expensive item many of our clients will purchase in their life, and more often than not, they are taken advantage of by dealerships who sell them a ‘lemon’ and lenders who provide loans they can’t afford.  This is profoundly disempowering for people as it impacts their ability to get to work; get kids to school; and attend medical appointments.  The heartbreak of this exploitation and the lack of recourse available is a real punch in the guts that impacts peoples’ ability to engage with the financial system as people don’t feel it’s possible to improve their circumstances.  When it comes to First Nations peoples, who are the majority of people we see impacted by dodgy dealers and lenders, this makes closing the gap that much harder.  I am pleased to see ASIC has listened to our concerns and taken court action against Money3.”

ICAN Financial Counsellor, Zack Wildy, helped an elderly woman to get out of her loan with Money3 and obtain a refund after they financed the purchase of a lemon vehicle from a Cairns dealership.  “She had bought the car for $8000 in April, and by September, it had broken down completely. She needed the car to drive her husband to his medical appointments, and their sole income was the age pension.  Despite the fact she could not afford the loan in the first place, she had managed to pay Money3 more than $11,000 to the loan, including $5000 from stolen wages payments that she had received.  When we highlighted what a poor deal this was, Money3 agreed to waive the remaining debt and refund her $7000.

Zack says it’s not always easy to get this kind of outcome from Money3. “We have had several cases where Money3 have refused to resolve the complaint quickly or appropriately.  This has meant we have had to take the complaint to AFCA (Australian Financial Complaints Authority), which can be time consuming and stressful for our clients.  The action by ASIC sends a strong and important message to used car lenders like Money 3 that the regulator is watching and encourages them to act appropriately when there are disputes.”

Car finance companies, like other lenders, are required under Australian credit laws to assess the ability of someone to repay the loan before they provide it.  The loan must meet the borrower’s needs and must be affordable.  Used car dealers are required to sell vehicles that are of acceptable quality under Australian Consumer Law.

For more information on what to look out for when you’re thinking about using a car loan to buy a car, go to ASIC’s MoneySmart website – Car loans: How to compare car loans and get the best deal.

ASIC also has a short video about buying cars called ‘Take a minute with your money’ that you can watch here