Car Loan Flex Commission class actions
Maurice Blackburn has filed two class actions relating to car loans. The first class action was filed in the Supreme Court of Victoria on 15 July 2020, against Westpac Banking Corporation and St. George Finance Limited (Westpac Car Loan Class Action). The second class action was filed in the Supreme Court of Victoria on 21 August 2020 against ANZ, Macquarie Bank and Macquarie Leasing for Esanda car loans (Esanda Car Loan Class Action).
You are eligible to register your interest in the Westpac Car Loan Class Action if you had a car loan between 1 March 2013 and 31 October 2018 issued under Westpac or St George’s credit licence (including Bank of Melbourne) that was organised by a car dealer.
You are eligible to register your interest in the Esanda Car Loan Class Action if you had a car loan between 1 January 2011 and 31 March 2016 issued under ANZ’s credit licence that was organised by a car dealer. This includes loans that started with Esanda and were transferred to Macquarie. Please note that car loans directly from Macquarie are not presently part of this class action but you can register your interest because we are still investigating Macquarie (see below).
The class actions are about the ‘flex commissions’ paid to car dealers by Westpac, St George and ANZ. The class actions allege that ‘flex commissions’ were unfair because they resulted in consumers paying a higher interest rates on their car loans. Flex commission arrangements allowed car dealers to set the car loan interest rate at a higher rate of interest than they would otherwise have been. The banks or finance companies paid the flex commissions because it incentivised the dealers to set interest rates at higher levels. The car dealers are the representatives of the banks or finance companies in relation to the car loans and the banks or finance companies are responsible for their actions.
It doesn't cost you anything to register your interest in our class action.
Maurice Blackburn is also investigating ‘flex commissions’ paid to car dealers by the other banks or lenders listed below between 1 March 2013 and 31 October 2018:
- Macquarie Bank / Macquarie Leasing
- Toyota Finance Australia Limited
- Nissan Financial Services.
- BMW Finance
- Alphera Financial Services
If you entered into car loans organised by car dealers with the above banks you are also invited to register your interest.
Am I eligible to join the Car Loan class actions?
Westpac Car Loan Class Action
You are eligible to register your interest if you had a car loan between 1 March 2013 and 31 October 2018 issued under Westpac or St George’s credit licence (including Bank of Melbourne) that was organised by a car dealer.
Esanda Car Loan Class Action
You are eligible to register your interest if you had a car loan between 1 January 2011 and 31 March 2016 issued under ANZ’s credit licence that was organised by a car dealer.
The class action includes car loans that started with Esanda and were transferred to Macquarie. Please note that car loans directly from Macquarie are not part of this class action at present.
About the Car Loan Flex class actions
The class actions concerns commission arrangements that were used by Westpac, St. George, ANZ and motor dealers to set the rate of interest charged to consumers.
Flex commissions were a common form of commission in the car finance industry for remunerating intermediaries such as car dealers and brokers, and which in many instances led to higher rates of interest being charged on car loans than otherwise would have been the case. The practice was banned by ASIC on 1 November 2018.
In a flex commission arrangement:
(a) the bank fixed a ‘base rate’ of interest that could be charged under a car loan agreement;
(b) the motor dealer or finance intermediary who sold the loan to the consumer was able to determine or recommend the interest rate for the loan;
(c) the discretion to increase the interest rate from a base rate was not determined by objective criteria, such as the credit risk of the consumer;
(d) the commission payable to the motor dealer or finance broker intermediary was set by the ‘flex amount’, being the difference between the base rate and the contract rate. The larger flex amount the larger the commission. The bank also benefited from the commission because the “flex amount” would, in practice, be shared between the bank and its intermediary.
Royal Commission comment:
Flex commission arrangements were not disclosed to the consumer. The final report of the Financial Services Royal Commission said:
Many borrowers knew nothing of these arrangements. Lenders did not publicise them; dealers did not reveal them. The dealer’s interest in securing the highest rate possible is obvious. It was the consumer who bore the cost. To the borrower, the dealer might have appeared to be acting for the borrower by submitting a loan proposal on behalf of the borrower. The borrower was given no indication that in fact the dealer was looking after its own interests rather than acting as a mere conduit between lender and borrower. For all the borrower knew, the interest rate the dealer quoted had been fixed by the lender. But, whenever the dealer quoted a rate larger than the base rate, the dealer was acting in its own interests.
The effect of the practice was that consumers could be charged significantly different interest rates from the same intermediary, depending on their ability to negotiate that rate. For example, the same car dealer on the same day could set the interest rate at 6.5% for one consumer and 15.15% p.a. for another consumer even though they bought the same model of vehicle for similar value.
Want to find out more?
Please see below some frequently-asked questions about the case.
If you would like further information regarding the class action, please contact us at Flexclassaction@mauriceblackburn.com.au or on 1800 318 063.
Please bear in mind that our phone lines and inbox may be quite busy with queries during this period, particularly given the ongoing disruptions associated with the COVID-19 health crisis. We will endeavour to respond to your calls and emails as soon as we can and thank you for your patience and understanding.
Frequently Asked Questions
Maurice Blackburn is Australia’s leading class action law firm. We have achieved the nation’s largest class actions recoveries, collectively having recovered over $3 billion in compensation for victims of wrongdoing.
Registering your interest in the Car Loan Flex Commission class action will not expose you to any out of pocket costs. All costs in the proceeding will be borne by Maurice Blackburn unless and until there is a successful outcome. In the event of a successful outcome, any costs payable by Maurice Blackburn will be deducted from, and will not exceed, any compensation that you are entitled to receive. All such costs are required to be considered and approved by the Court.
As a member of the class (and not the Representative, in whose name the case has been brought), an adverse costs order may not be made directly against you in respect of the determination of the common issues in the class action. Unless and until there is a successful outcome, all costs will be borne by Maurice Blackburn.
Where seven or more people have claims that arise out of similar circumstances, a class action can be brought by one claimant on their own behalf and as a representative of others.
The class action process saves time and expense by avoiding the need for the courts to determine common issues of fact or law more than once. Class actions are efficient, enabling disputes and claims involving large numbers of people to be resolved via a single case.
Maurice Blackburn's class action
record is second to none.
We are the only Australian class actions firm to deliver $100M+ settlements to clients in shareholder and listed securities actions, and have done so on seven occasions.
We've recovered in excess of $3 billion for wronged clients since the inception of our class actions practice in 1998.
Our reputation for excellence in class actions is unparalleled, increasing our chances of:
Lower cost to clients
Andrew WatsonNational Head of Class Actions,
"I'm an experienced litigator in class actions, particularly for shareholders who have been victims of corporate misconduct."
Ben SladeState Managing Principal, Office Leader,
"I am driven to give a voice to those who would otherwise have to suffer because those who have done them wrong are all too powerful."
Richard RyanPrincipal Lawyer,
"I'm a litigation and dispute resolution Principal Lawyer with considerable experience in a wide range of commercial disputes."