Over 30,000 car owners who purchased tyre and rim insurance from financiers including banks and car makers themselves will receive refunds worth a collective $15 million after an investigation by the corporate watchdog.
Toyota, BMW and Nissan have all been named in the refund announcement, with banking group ANZ owing the highest amount to the greatest number of customers – $5 million distributed across 9,829 buyers.
The Australian Securities and Investments Commission said a review of financing of tyre and rim insurance premiums found several groups had made customers pay undue interest – and locked them into unfair contracts.
The review began after BMW voluntarily notified ASIC after discovering it had breached the National Credit Code.
Tyre and rim insurance isn’t usually included in standard policies. The major problem was that contracts had been arranged that charged customers “undue interest”.
“These businesses were quick to respond once it was brought to their attention,’ ASIC deputy chairman Peter Kell said in a statement. ‘We acknowledge the high degree of cooperation of the car finance industry in bringing about this important result for consumers.”
“We look forward to seeing an ongoing improvement in compliance in the car finance sector,’ Kell said.
‘However, if we find that there are car financiers that have failed to respond to this issue, we will act quickly and decisively with strong regulatory action.”
The full list of refunds for each company is available here.
The worst offenders were ANZ, Capital Finance Australia, Yamaha Motor Finance and BMW Australia Finance – each company owes well over $1 million in refunds, with Capital Finance owing $2.7 million.
ASIC has been undertaking several reviews of specific industries in the past few months. In July, the watchdog released a report on the debt consolidation industry, in which it said licensed providers were not keeping sufficient records.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
