The Full Federal Court today dismissed an application by Cigno Pty Ltd (Cigno) which sought to quash ob体育鈥檚 first product intervention order in relation to short term credit.
ob体育 made the industry wide order, , on 12 September 2019 to address what it considered to be significant detriment in the short term credit market, as set out in ob体育鈥檚 public notice (19-250MR).
This was the first order made by ob体育 under these important new powers.
On 15 April 2020 the Federal Court dismissed Cigno鈥檚 application, which alleged ob体育 had made legal errors in making the product intervention order and sought to have it quashed (20-089MR).
The Full Court has today upheld this decision, and found in favour of ob体育鈥檚 application of the product intervention order provision. In particular, the Court found that in assessing consumer detriment ob体育 is entitled to consider not just the characteristics of the relevant financial product, but also the particular circumstances in which it is supplied.
ob体育 Deputy Chair Sarah Court said 鈥榦b体育 has been steadfast in our efforts to address consumer harm from high cost credit products. We made this product intervention order to put a stop to the significant detriment we saw from predatory lending.
鈥榃e welcome this important decision, which will assist ob体育 to protect vulnerable consumers from harmful short term credit practices in future.鈥�
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Background
On 12 September 2019, ob体育 made a product intervention order by way of legislative instrument for聽 short term credit (19-250MR). The order came into force on 14 September 2019. The order followed ob体育鈥檚 consultation on the proposed intervention to stop significant consumer harm in short term credit.
The short term credit product intervention order lapsed in March 2021. 聽ob体育 did not seek to extend the product intervention order because of ambiguity in the product intervention provisions in the Corporations Act 2001 and the National Consumer Credit Protection Act 2009.
On 24 June 2021, the Treasury Laws Amendment (2021 Measures No.4) Bill 2021 was passed which provided amendments to ob体育鈥檚 product intervention power.聽 The amendments remove the ambiguity and ensure ob体育鈥檚 ability to intervene in relation to the costs of a financial and credit product.
On 29 September 2020, ob体育 commenced proceedings against Cigno and BHF Solutions Pty Ltd seeking injunctions and declarations of contraventions of the National Consumer Credit Protection Act 2009 regarding continuing credit contracts (20-226MR). A hearing was held on 27 鈥� 28 May 2021. On 23 June 2021, the Federal Court dismissed ob体育鈥檚 application (21-144MR). ob体育 is considering the judgment.聽
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