The Federal Court’s reasons for judgment in Australian Securities and Investments Commission v Layaway Depot Pty Ltd [2023] FCA 1685 have been published.

The Federal Court found Layaway engaged in unlicensed credit activity and charged consumers in excess of the annual cost rate of more than 48% by virtue of its hire-purchase arrangements.

The arrangements offered consumers the option to purchase household appliances and electronic goods by making regular payments to Layaway (via direct debit from their bank account) while having possession and use of the goods.

Layaway was ordered to pay the Commonwealth a pecuniary penalty of $375,000.00 together with ASIC’s costs of $25,000.

The Court also ordered an injunction permanently restraining Layaway from engaging in a credit activity and entering into credit contracts with an annual cost rate that exceeds 48%.

Section 9 of the National Credit Code (which is Schedule 1 to the National Consumer Credit Protection Act 2009) provides that a contract for the hire of goods under which the hirer has a right or obligation to purchase the goods, is to be regarded as a sale of the goods by instalments (and is therefore a regulated credit contract) if the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so) exceeds the cash price of the goods.

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