ASIC sues debt collection company for breaching consumer credit protection laws

ASIC has commenced civil penalty proceedings in the Federal Court against Ultimate Credit Management Pty Ltd.

ASIC alleges that between 10 May 2019 and 11 December 2019, Ultimate Credit Management began proceedings against 24 borrowers in NSW even though the borrowers lived in other states.

National consumer credit protection legislation requires credit providers to commence debt recovery proceedings in the state or territory in which the borrower lives.

The original loan amounts that Ultimate Credit Management sought to recover from these proceedings ranged from as little as $400 to $2,850.72. Most of these loans were high cost, attracting interest at 48% per annum.

ASIC is concerned that these alleged failures resulted in significant consumer harm. Commencing proceedings outside of a borrower’s home state makes it much more difficult for borrowers to defend themselves in the proceedings, especially if they wish to appear in person.

The Financial Ombudsman Service and subsequently the Australian Financial Complaints Authority (AFCA) advised Ultimate Credit Management as early as 17 May 2018 that beginning proceedings against borrowers outside of the borrower’s home state was a breach of the obligations imposed on credit licensees. However, ASIC alleges that Ultimate Credit Management continued to initiate such proceedings.

ASIC alleges that Ultimate Credit Management’s conduct breached its obligation as a credit licensee to do all things necessary to ensure that it engaged in credit activities efficiently, honestly and fairly.

ASIC is seeking declarations and pecuniary penalties against Ultimate Credit Management.

The date for the first case management hearing is yet to be scheduled by the Court.

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