Ferratum Australia Pty Ltd (in liquidation) has been ordered to pay a total of $16 million in penalties by the Federal Court for numerous contraventions of the National Consumer Protection Act and the National Credit Code.
The Court had earlier found that Ferratum had:
entered into contracts which imposed prohibited fees and charged those fees to its customers,
incorrectly calculated payout amounts for its customers in two-thirds of the sample that ASIC reviewed, including one customer who was overcharged over 30% of their total loan amount, and
failed to maintain the systems necessary to ensure it charged its customers properly for early payouts on small amount credit contracts.
ASIC Deputy Chair Sarah Court said, ‘Ferratum’s conduct was egregious. It offered short term loans to often vulnerable customers, significantly compounding their hardship by charging fees that it was not legally entitled to charge. This significant penalty is the latest outcome in ASIC’s ongoing work to combat consumer harm resulting from high-cost credit.’
In handing down the penalty decision, Justice Kennett noted that Ferratum’s breaches of the law appeared ‘systemic and deliberate (or at least reckless) […] because they are a function of Ferratum having, over a long period, failed to deal with obvious and persistent deficiencies in its system.’
His Honour said, ‘the great majority of [Ferratum’s] customers can be taken to have been persons of very limited means who were vulnerable to exploitation. The amounts involved could well have been significant for some customers.’
In determining the penalties to be imposed on Ferratum, his Honour took into account the control of the Australian business by Ferratum’s parent company, Multitude SE, a Finland-based multinational.
Justice Kennett observed that Ferratum’s non-compliance appeared to arise from Multitude SE’s lack of attention to Australian regulatory requirements. ‘It is appropriate that the orders made should seek to deter Multitude SE against taking a similar approach to doing business in Australia in future in the event that it seeks to re-enter the market,’ His Honour said.