In Australian Securities and Investments Commission v General Commercial Group Pty Ltd
[2023] FCA 24 the Federal Court of Australia fined finance companies General Commercial Group Pty Ltd (formerly known as Urban Commercial Group) and Eden Capital (Australia) Pty Ltd (formerly known as Southside Lending) $50,000 each for breaching section 47(1)(m) of the National Consumer Credit Protection Act 2009 (Cth) by reason of a contravention of their obligation under reg 11A(2) of the National Consumer Credit Protection Regulations 2010 (Cth) to take reasonable steps to cooperate with the Australian Financial Complaints Authority (AFCA) with respect to certain AFCA complaints.

General Commercial director Dale Brendan Heremaia and his son, Eden Capital director Benjamin Eden Heremaia, were ordered to pay $30,000 and $20,000 respectively for their roles in the misconduct.

Both companies have been restrained from engaging in credit activity for 12 months and the Heremaias are restrained from being involved in any business carrying on credit activity. Eden Capital will be allowed to collect payments on existing loans.

Among other matters, their contraventions involved failing to provide documents sought by AFCA with respect to the complaints, commencing proceedings in the Queensland Civil and Administrative Tribunal (QCAT) against complainants and an AFCA staff member, and uncooperative communications with AFCA.

Urban and Eden also admitted that they contravened the obligation imposed by s 47(1)(a) of the Credit Act to do all things necessary to ensure that the credit activities authorised by their respective Australian Credit Licences were engaged in efficiently, honestly and fairly. This included Urban wrongly attempting to rely upon a settlement agreement to which it was not a party.

Urban and Eden each held an Australian Credit Licence issued pursuant to Part 2.2 of the Credit Act and were members of the Australian Financial Complaints Authority external dispute resolution scheme.

Urban’s business included providing advice to consumers about obtaining home financing in circumstances where those consumers may not have had sufficient funds for a deposit. This advice typically involved recommending a loan to be arranged by Urban.

Eden’s business included providing the initial loans arranged by Urban on behalf of consumers.

In assessing the amount of the penalty Justice Downes observed:

This conduct continued over a lengthy period of time, it was not inadvertent and it undermined the effective operation of AFCA’s processes and the resolution of the complaints by the consumers. However, there is no suggestion of dishonesty.

During the investigation prior to commencement of these proceedings, the respondents demonstrated limited cooperation with ASIC in response to statutory notices issued by ASIC.

The responses by the respondents to the statutory notices issued by ASIC were consistent with their previous uncooperative communications with AFCA.

ASIC accepted that the Court may proceed on the basis that Urban and Eden are companies of modest size and financial position.

The respondents accept that their actions may have been “better considered” and that a different course should have been undertaken by them. Further, they have demonstrated remorse in relation to their actions.

The respondents have also indicated their intention to exit the market once their obligations under the proposed orders are met. In these circumstances, the contraventions are unlikely to be repeated. This supports a conclusion that the penalties to be imposed, as agreed by the parties, would achieve the object of specific deterrence.

The defendants agreed to pay ASIC’s costs.

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