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Commencing today (14 October) at the Victorian Supreme Court, the flex commission class action began against Westpac Banking Corporation and St. George Finance and Macquarie Leasing Pty Ltd.
According to Maurice Blackburn Lawyers, the flex commission arrangements “allowed car dealers to set the interest rate and loan term on car loans. The higher the interest rate and the longer the loan term, the greater the commission received by the dealer. These arrangements were banned by ASIC on 1 November 2018 and were a subject of inquiry at the Financial Services Royal Commission.”
The plaintiffs are alleging that the banks’ use of flex commissions was unfair and unlawful by charging consumers higher interest rates on car loans.
“This is a group proceeding (class action) brought on behalf of persons who entered into car loans issued under Westpac or St George Finance’s credit licence, in the period 1 March 2013 to 31 October 2018, with respect to which a “flex commission” was paid to the car dealer,” said the Supreme Court of Victoria in a statement.
“The claim alleges that car dealers acted on behalf of Westpac and St George Finance in providing certain credit services to group members who took out car loans with those dealers. The claim alleges that the terms of those car loans relating to the ‘flex commissions’ constituted ‘unfair conduct’ for the purposes of the National Consumer Credit Protection Act 2009 (Cth).
“It is also alleged that Westpac and St George Finance engaged in misleading or deceptive conduct by failing to disclose to those borrowers certain matters concerning the loan agreements. The claim seeks to restrain the lenders from charging further interest, the repayment of interest under the loans or alternatively seeks Court orders voiding the loan agreements or providing compensation to group members.”
The joint trial is seeking compensation for thousands of consumers. Maurice Blackburn’s national head of class actions Rebecca Gilsenan called the alleged misconduct “predatory”, especially amid a cost-of-living crisis.
“We are fighting for customers of Westpac and Macquarie to be justly compensated for secret commissions paid by the banks that had them overpaying because of predatory car yard finance practices,” Gilsenan said.
“Class actions like this are the only way that many victims of egregious corporate misconduct are able to pursue compensation or recover money that is rightfully theirs. Increasingly, these rights are under attack by corporate interests that want to deny everyday Australia’s access to justice and shield themselves from accountability.”
The trial is expected to run for seven weeks.
Related: Major bank found to have breached continuous disclosure laws
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