ASIC finds Rent to Own business charging customers up to 208%
Rent to Own Appliances has had its licence cancelled by ASIC.
The Australian Securities and Investment Commission (ASIC) has cancelled the licence of rental business Rent to Own Appliances. The company was found charging more than the ASIC-mandated cap of 48% p.a., in some cases as much as 208%.
Rent to Own Appliances has agreed to stop collecting payments from current contracts and allow customers to keep the appliances they were renting. ASIC deputy chair says the case shows ASIC will remove licensees from the industry if they fail to meet their legal obligations.
"Credit licensees must understand their obligations under the law and take compliance with those obligations seriously. This includes understanding the limits in the law about maximum interest rates which they can charge consumers."
A rent to buy business allows customers to rent an item for a certain period of time and then own it at the end of the period. The customer enters into a credit contract which essentially makes a commitment to buy the item by making regular repayments. The industry featured heavily in the Treasury's final recommendations on Small Amount Credit Contract (SACC) laws, with 10 of the 24 recommendations centring on consumer leases.
So far, only one recommendation from the Treasury has been put into practice, with ASIC recently announcing a ban on direct debit fees for SACCs.
Rent to Own Appliances credit licence ban comes into effect from 26 October 2016. Any existing customers should contact the business directly with any questions they have.