THE lending arm of BMW Australia, BMW Finance, has been fined $391,000 and had a condition placed on its credit licence by the Australian Securities and Investments Commission (ASIC) that it appoint an auditor to police its activities over the next 12 months.

It is the second fine for BMW Finance by ASIC in less than a year, following its $306,000 fine in February 2015 for 36 infringements. The latest fine relates to 22 breaches. Both cases are related and stem from the same investigations.

BMW Finance provides motor vehicle finance to consumers both directly and through its dealer network.

ASIC said the car finance licence condition requires BMW Finance to appoint a compliance consultant after it was found to have breached consumer protection provisions.

The consultant is required to conduct a review and report to ASIC on BMW Finance’s policies and procedures on a quarterly basis over 12 months.

ASIC said the failure by the financier to verify the borrowers’ financial position and inform them of their rights “resulted (in) customers entering into unsuitable loans and losing the benefit of important protections to reduce the impact of financial hardship”.

ASIC deputy chair Peter Kell said the fines against BMW Finance showed that failing to comply with consumer protection provisions can result in significant penalties.

“ASIC will continue to monitor compliance with these provisions to reduce the risk of borrowers being placed into unsuitable loans and to ensure that borrowers are informed of the rights and options available to them when facing financial hardship,” he said.

BMW Group Australia told GoAutoNews Premium that BMW Financial Services has fully cooperated with ASIC and all infringement notices have been settled.

It has referred customers wanting more information to the BMW Finance Customer Assistance Line on 03 9264 4492 or at resolutionsofficer@bmw. finance.com.au.

Vehicle finance lending practices have come under the scrutiny of ASIC in the past year, including the investigation and subsequent fining and sacking of two staff at a Western Australian car finance provider, Get Approved Finance, and its lender, Esanda.

In October 2015, ASIC ensured that Esanda compensate more than 70 borrowers for car loans organised by Get Approved Finance.

It found that between 2011 and 2014, 15 brokers employed by Get Approved Finance engaged in unfair conduct by having Esanda approve loans amounting to $1.38 million for consumers with poor credit histories and who otherwise would not have met Esanda’s lending criteria.

By Neil Dowling