SYDNEY, Australia, Dec 7 – German car giant BMW has agreed to pay Aus$77 million (US$57 million) to compensate thousands of Australians who were misled into taking loans they could not afford in the country’s largest consumer payback scheme.
The Australian Securities and Investments Commission said at least 15,000 customers may have “suffered hardship as a result of BMW Finance’s compliance failure”.
ASIC deputy chairman Peter Kell highlighted BMW’s “sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many consumers.
“We are encouraged that BMW Finance has recognised these shortcomings and agreed to a remediation programme that will see thousands of consumers compensated,” Kell said in a statement released Tuesday.
“This is an example of the staggering cost of poor business practices.”
BMW said Wednesday it was actively working with Australian authorities to meet its regulatory commitments.
“BMW Australia Finance Limited has, for some time, been co-operating fully with the Australian Securities and Investments Commission to ensure the company is working on its processes to meet all regulatory obligations,” a BMW spokeswoman told AFP.
Kell cited the case of a 76-year-old man who was given a Aus$50,000 loan for a car worth only half that amount and without regard to his real earnings.
BMW Finance’s credit licence will now be subject to an external consultant’s oversight for the next year and to a “live review” of credit applications.
ASIC, the government’s corporate regulator, issued 58 infringement notices to BMW Finance relating to the repossession of motor vehicles and responsible lending breaches between January 2015 and February this year.
The refund package covers Aus$50 million in loan write-offs, Aus$14.6 million in remediation payments and Aus$7.6 million in interest rate reductions on current contracts, ASIC said.