The Federal Court has handed down a mixed judgment in a case brought by the corporate regulator against Money3 Loans Pty Ltd, finding the car finance provider failed to make reasonable inquiries and verification of borrowers’ living expenses in five cases but rejecting claims that it placed those customers into unsuitable loans.
ASIC had alleged Money3 breached responsible lending laws in loans to five borrowers who were largely or solely reliant on Centrelink payments. The Court found Money3 did not 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 Money3 failed to assess whether the loan contracts were unsuitable and that it entered the customers into unsuitable loans.
The Court also dismissed ASIC’s claims that Money3 failed to take reasonable steps to ensure its representatives complied with credit legislation, or that its staff were inadequately 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 the case were written between May 2019 and February 2021.
ASIC had argued Money3 relied on an internal guide with minimum living expense figures that were arbitrary or unrelated to borrowers’ actual costs, undermining proper unsuitability assessments. The Court found ASIC did not establish that the figures were arbitrary, nor that Money3 should have used a benchmark such as the Household Expenditure Measure.
A case management hearing has been listed for 30 October 2025.
ASIC began civil penalty proceedings on 17 May 2023 and acknowledged assistance from consumer representatives and affected borrowers. The regulator has flagged used car finance sold to vulnerable consumers as an enforcement priority for 2025, alongside misconduct impacting First Nations people.
Consumers who believe they have been provided an unsuitable loan can complain to their lender and, if unsatisfied, escalate to the Australian Financial Complaints Authority. Free and confidential help is available from financial counsellors via the National Debt Helpline on 1800 007 007, or through the Mob Strong Debt Helpline.
