LUXURY vehicle brand BMW has agreed to pay its dues following a five-year string of lending failures which resulted in hardship for consumers.
ASIC accepted an enforceable undertaking from BMW Finance, which will see the car dealer implement Australia's largest consumer credit remediation program to the tune of $77 million.
The repayment scheme will be split, with $14.6 million going to remediation payments, $7.6 million to be paid in interest rate reductions on current contracts and $50 million committed to loan write-offs.
Steering into the skid, BMW Finance has also agreed to pay a further $5 million community benefit towards consumer advocacy and financial literary initiatives.
According to ASIC, the remediation program will identify at least 15,000 customers who may have suffered hardship as a result of BMW Finance's compliance failures.
ASIC Deputy Chairman Peter Kell says the car dealer's inadequacies over the past few years may have been the result of its culture.
"BMW Finance had a sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many consumers," says Kell.
"We are encouraged that BMW Finance has recognised these shortcomings and agreed to a remediation program that will see thousands of consumers compensated."
The program is open to all customers under the BMW Financial Services, Mini Financial Services and Alphera Financial Services brands, who between January 2011 and August 2016 may have suffered hardship at the hands of loan compliance failures.
Kell says the BMW Finance outcome should act as a red light to other car financiers who might also be pushing the boundaries of their credit schemes.
"This is an example of the staggering cost of poor business practices and should act as a warning to other car financiers to get their houses in order," says Kell.
Consumers can find out whether they are due any compensation from ASIC's MoneySmart website.
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