ANZ Settles $85 Million Dispute in Car Loan Commission Case
ANZ Settles $85 Million Dispute in Car Loan Commission Case
1
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
A significant settlement has been reached by financial powerhouse ANZ, totaling $85 million, concerning practices in its former car financing division.
The settlement puts an end to allegations surrounding ANZ's controversial loan commission strategy, which purportedly exploited consumers purchasing vehicles.
Bringing this issue to light, prominent law firm Maurice Blackburn Lawyers had initiated multiple class actions, implicating financial institutions including ANZ, Westpac, St George Finance, and Macquarie Leasing. The accusations centered on the employment of "flex commission" systems, which the Australian Competition & Consumer Commission (ACCC) prohibited in November 2018.
In essence, flex commissions permitted car dealerships to control the interest rates and terms of the vehicle loans they arranged. According to Maurice Blackburn, these provisions incentivized dealerships to inflate interest rates and prolong loan durations to secure more substantial commissions from banks.
"In our role as representatives of the affected group members, we contend that these commissions were not only unfair but also unlawful, leading consumers to incur inflated loan interest costs," reads a statement on Maurice Blackburn's website. "Compensation and other forms of redress are sought for those adversely impacted."
Rebecca Gilsenan, the national head of class actions at Maurice Blackburn, hailed the ANZ settlement as a transformative outcome for impacted customers. "This result represents a crucial victory for borrowers who were left paying undue amounts on their car loans," Gilsenan announced on Friday.
Gilsenan emphasized the expectation of borrowers that dealers, distinct from lenders, should provide the most competitive loan rates. She noted the positive rectification by ANZ as they accorded fairness to their past customers.
This outcome, originating from a report by NewsWire, signals the end of a lengthy legal confrontation for ANZ, occurring alongside forthcoming proceedings involving Westpac and St George Finance and Macquarie Leasing at the Victorian Supreme Court, scheduled to resume late October.
Despite agreeing to the settlement, ANZ clarified that it does not admit liability within any of the cases it resolved. "The Esanda class action concerned flex commissions applied to Esanda car loans arranged by dealers from 2011 till the end of March 2016," mentioned a statement from ANZ. Notably, the bank divested its Esanda Dealer Finance holdings in 2016, showcasing its departure from this business model.
Further, ANZ disclosed a $14 million settlement concerning another legal issue related to superannuation fund investments through its formerly owned entities, OnePath Custodians and OnePath Life.
Conclusively, the described settlements require approval from the court, maintaining ANZ's consistent stance of no liability affirmation. Responses from Westpac and Macquarie Bank remain awaited.
Published:Sunday, 6th Oct 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian Automotive Dealer Association (AADA), in collaboration with AutoGrab, has released the Annual 2025 Automotive Insights Report, providing a comprehensive overview of the nation's used car market over the past year. The report indicates a stabilisation in the market, with total used car sales reaching 2.32 million vehicles in 2025, a slight decrease of 0.37% compared to 2024. - read more
The Clean Energy Finance Corporation (CEFC) has announced a significant partnership with Hyundai Capital Australia (HCAU), committing up to $60 million to reduce the upfront costs associated with electric vehicle (EV) ownership. This initiative is designed to make EVs more accessible to Australian households and small businesses by offering discounted finance rates on eligible Hyundai and Kia electric models. - read more
The Australian Securities and Investments Commission (ASIC) has commenced a thorough review of the motor vehicle finance sector, focusing on enhancing consumer protections and ensuring compliance with responsible lending obligations. This initiative is particularly attentive to the experiences of borrowers in regional and remote areas, including First Nations communities. - read more
The Australian government has unveiled a new initiative to make electric vehicles (EVs) more accessible to a broader segment of the population. This program offers low-interest loans to Australians earning less than $100,000 annually, as well as to essential workers such as police officers, teachers, firefighters, and nurses, regardless of their income level. The loans are available for both new and used EVs priced up to $55,000. - read more
Macquarie Bank has announced a strategic decision to cease offering new car loans through its direct, broker, and novated leasing channels. This move is part of the bank's broader strategy to concentrate on expanding its home loan and deposit services. - read more
With the rising cost of living, many Australians are opting for used vehicles as a cost-effective alternative to brand-new cars. Buying a used car can offer significant savings, reducing the initial financial burden while still providing reliable transportation. - read more
Buying a car is a significant financial decision, and understanding the loan terms involved is crucial to navigating this process effectively. Loan terms can dramatically affect how much you end up paying over the life of your loan, and they play a pivotal role in ensuring that you are empowered during the car buying process. These terms determine your monthly payments, interest rates, and the total cost of the car in the long run. - read more
Stepping into the world of auto financing can be as daunting as it is exciting. The commitment of a new car loan demands more than just desiring your dream car; it necessitates a balanced budget and a solid financial plan. Understanding how to prepare before signing on that dotted line is not only wise, it’s imperative for your financial health. - read more
Before taking the plunge into car ownership, it's crucial to have a clear view of your current financial health. Start by evaluating your income, monthly expenses, and any savings you may have set aside. This assessment will give you a realistic picture of how much you can allocate towards buying a car without straining your finances. - read more
There's a unique thrill that comes with purchasing a new car; it's not just about getting from point A to B, but about fulfilling a dream and the freedom of the open road. However, with the excitement comes the need for careful planning and smart decision-making to ensure that your investment pays off in the long term. - read more
Need Help Finding a Loan?
Get a free car loan eligibility assessment and compare offers tailored
specifically to your circumstances.
All finance quotes are provided free (via our secure server) and without
obligation. We respect your
privacy.
Knowledgebase
Inflation: The rate at which the general level of prices for goods and services rises, eroding purchasing power.
