ANZ Bank has reached a landmark $85 million settlement following accusations of engaging in predatory car loan practices. This settlement addresses the bank’s involvement in the controversial flex commission arrangements, which allegedly resulted in higher car loan interest rates for consumers.
What Are Flex Commissions and How Did They Affect Borrowers?
Flex commissions, which were banned by the Australian Competition and Consumer Commission (ACCC) in 2018, allowed car dealers to set variable interest rates on car loans. These commissions encouraged dealers to push higher interest rates, as they would receive larger commissions in return. This practice disproportionately affected car buyers, who ended up paying significantly more for their loans.
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ANZ, along with Westpac, St George Finance, and Macquarie Leasing, were implicated in these practices through class action lawsuits led by Maurice Blackburn Lawyers. According to the lawsuits, consumers were unfairly charged excessive interest rates due to these flex commission schemes.
Class Action Lawsuits and Consumer Compensation
Maurice Blackburn, one of Australia’s leading law firms, filed the class actions on behalf of consumers who had taken out car loans between January 2011 and March 2016. The legal team is seeking compensation for borrowers who were negatively impacted by the high interest rates tied to these predatory loans.
In a statement, Maurice Blackburn’s head of class actions, Rebecca Gilsenan, called the ANZ settlement a “historic win” for Australian consumers who overpaid on their loans.
“We are pleased that ANZ has taken responsibility and agreed to compensate affected customers,” said Gilsenan. “This settlement ensures that consumers receive the compensation they deserve after being unfairly charged higher rates.”
What the Settlement Means for ANZ Customers
The $85 million settlement covers Esanda dealer-arranged car loans, which were part of ANZ’s financing portfolio before it sold the Esanda Dealer Finance division in 2016. This compensation will provide relief to many car buyers who were overcharged due to the bank’s predatory lending practices.
ANZ clarified in a statement that the settlement was reached “without admission of liability.” The bank noted that this settlement aims to resolve the matter without further litigation.
In addition to the car loan case, ANZ also disclosed a $14 million settlement related to a separate superannuation class action concerning the management of superannuation funds through OnePath, which was previously owned by ANZ.
Legal Proceedings Against Other Banks
The lawsuit against Westpac, St George Finance, and Macquarie Leasing is still ongoing, with a trial set to begin in late October in the Victorian Supreme Court. Westpac confirmed that it no longer uses flex commissions following the 2018 ACCC ban but declined to comment further while the case is still before the court.
