The Federal Court has delivered judgment in ASIC's proceedings against Money3 Loans Pty Ltd (Money3), a car finance provider that ASIC alleged breached responsible lending laws when it entered into five loans with borrowers who were largely or solely reliant on Centrelink payments.
The Court found Money3 failed to make reasonable inquiries about or verify each borrower's living expenses based on bank statement transaction data, and in one instance failed to make reasonable inquiries about a borrower's requirements and objectives. However, it rejected ASIC's allegations that the car finance provider failed to assess whether the loan contracts were unsuitable for borrowers and entered them into unsuitable loans.
The Court also rejected ASIC's claims that Money3 failed to take reasonable steps to ensure its representatives complied with credit legislation or that its representatives were not adequately trained and competent.
ASIC Chair Joe Longo said, 'ASIC took this case after receiving numerous complaints, including from consumer advocates. We were concerned that consumers on social security payments were entering into potentially unsuitable loans. We are currently considering the judgment.
'Responsible lending laws exist to ensure that credit providers do not enter consumers into loans that will cause them detriment in the long run. These laws are an important part of Australia's consumer protection framework. Even though we may not ultimately be successful in every case we run, it is important ASIC take action to enforce the law where it is concerned a breach has occurred.'
The five loans at the centre of ASIC's case were entered into between May 2019 and February 2021.
ASIC had alleged that in entering into these loans Money3 relied on an internal guide which specified minimum living expense figures that were arbitrary or unrelated to the real expenses of its borrowers. As a result, ASIC was concerned that Money3 was unable to conduct proper assessments of whether loans were unsuitable for borrowers. However, the Federal Court found that ASIC did not establish that the figures in Money3's guide were arbitrary or that Money3 should have used a benchmark such as the Household Expenditure Measure (HEM).
A case management hearing has been listed on 30 October 2025.
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Background
ASIC commenced civil penalty proceedings against Money3 on 17 May 2023 (23-126MR).
ASIC acknowledges the assistance provided by consumer representatives and affected borrowers in providing evidence to ASIC.
Improving consumer outcomes is a key strategic priority for ASIC. Used car finance sold to vulnerable consumers by finance providers is an enforcement priority for 2025. Misconduct impacting First Nations people is also an enduring enforcement priority.
If you believe you have been provided with an unsuitable loan, you can make a complaint to your lender. If you are not satisfied with the response, you can lodge a complaint with the Australian Financial Complaints Authority (www.afca.org.au).
If you need help, you can speak to a free and confidential financial counsellor at the National Debt Helpline on 1800 007 007 or through Mob Strong debt helpline.
Moneysmart has information about loans and alternatives and where to find help with managing debt.
