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Why ANZ got fined $5 million for its Esanda car loans business

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The court found 320 Esanda car loan customers are likely to have been affected.

The Federal Court in Melbourne has published its findings and reasons for ordering ANZ a $5 million fine over irresponsible behaviour by its former car finance business Esanda. The court found that ANZ failed to take reasonable steps to verify the consumer's income in the case of 12 car loan applications from 3 brokers.

The court found that the bank relied solely on payslips in circumstances where it knew that these documents could easily be falsified and it received the document from a broker that it had reason to doubt. For example, in one of the cases, the broker had previously been investigated for fraud.

The Australian Securities and Investments Commission (ASIC) notes that while ANZ did not completely fail to take steps to verify the customer's financial situation, it placed too much weight on payslips received from brokers.

"A consumer's income is an essential component in determining their ability to repay a loan," ASIC deputy chairman Peter Kell said.

"Lenders must take reasonable steps to verify a consumer's financial situation, and this includes checking the reliability of documentation that is provided to them. Lenders must be alert to the potential for documents to be falsified and ensure that their controls are sufficiently robust. "

According to ASIC, ANZ will be remediating approximately 320 car loan customers for loans taken out by three business brokers from 2013 to 2015. This will total approximately $5 million.

The bank will offer eligible customers the option of entering into a new loan that has more favourable terms or providing a refund. Any default listings will also be removed. If you think you have been affected, contact ANZ on 132 373.

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