ANZ To Pay AU$85 Million In Settlement Over Alleged Predatory Car Loan Practices

Banking giant ANZ is paying out AU$85 million as part of a settlement in a class action lawsuit over allegations of predatory car loan practices.

Law firm Maurice Blackburn brought triple class action claims against ANZ, Westpac, St George Finance, and Macquarie Leasing over alleged exploitation of flex commission arrangements, which were banned in 2018.

The lawsuit claimed that ANZ unfairly profited from "flex commissions" paid to car dealers for arranging loans with inflated interest rates and longer terms, reported News.com.au.

"The plaintiffs, on behalf of group members in these class actions, allege that flex commissions were unfair and unlawful and resulted in consumers paying higher interest rates on their car loans than they otherwise would have," Maurice Blackburn said on its website. "As a result, they are claiming compensation and other relief for those who have been affected."

The Australian Securities and Investments Commission (ASIC) outlawed flex commission arrangements in the car finance market to safeguard consumers from paying inflated interest rates and longer loan terms.

A conflict of interest resulted from these agreements, which gave auto dealers the power to determine loan terms and interest rates. They also allowed them to charge larger commissions for longer loans.

Between 2011 and 2016, thousands of consumers may have suffered because vehicle dealers were encouraged to put profits ahead of obtaining the best offers for clients.

Calling the settlement a "historic win," Maurice Blackburn national head of class actions Rebecca Gilsenan said they were pleased to offer consumers a respite from paying unnecessarily high prices.

"We are very pleased to have achieved this result for consumers. They had a right to expect that dealers were offering the best rate because they understand the roles of car dealers and lenders are distinct," Gilsenan said, per Nine News.