Ferratum Australia Pty Ltd (in liquidation) has been ordered to pay a total of $16 million in penalties by the Federal Court for numerous breaches of the National Consumer Protection Act and the National Credit Code.
The Court had earlier found that Ferratum had:
- has entered into contracts that impose prohibited fees and charges such fees to its customers;
- incorrectly calculated payment amounts for its customers in two-thirds of the sample ASIC reviewed, including one customer who was charged more than 30% of the total loan amount and
- failed to maintain the necessary systems to ensure that it charged its customers correctly for early payments on small amount credit agreements.
In determining the sanctions to be imposed on Ferratum, his Honor took into account the control of the Australian business by Ferratum’s parent company, Multitude SE, a multinational based in Finland.
Justice Kennett observed that Ferratum’s non-compliance appeared to be due to Multitude SE’s lack of attention to Australian regulatory requirements. “It is appropriate that the orders made seek to prevent Multitude SE from adopting a similar approach to doing business in Australia in the future should it seek to re-enter the market,” Honor said.
ASIC commenced proceedings against Ferratum on 1 November 2021. Ferratrum defended the allegations until its voluntary liquidation on 4 April 2023. The Court allowed ASIC to continue proceedings despite Ferratum’s liquidation.
On 7 September 2023, the Court found that between March 2019 and August 2021, Ferratum breached consumer credit protection laws in relation to small credit agreements:
- charging borrowers prohibited fees, such as direct debit fees when using certain credit cards and fees for changing direct debit settings;
- entering into contracts with borrowers who imposed prohibited fees;
- incorrect calculation of the payment amount for early repayment in two-thirds of the specified contracts and
- failing to act effectively, honestly and fairly in ensuring that it had an accurate and reliable system for calculating, recording and monitoring early payment amounts.
At the time of the misconduct, Ferratum’s ultimate holding company was Multitude SE, a European limited liability company based in Finland that provides mobile and digital financial services to consumers and small businesses worldwide.
According to national consumer credit protection laws, small credit agreement providers must not charge fees and charges beyond a set-up fee, a monthly fee, a default fee under the agreement, or a government fee, charge or duty .
If consumers have taken out a loan with Ferratum and are concerned they may have been affected by this behaviour, they can lodge a complaint with the Australian Financial Complaints Authority (AFCA) on 1800 931 678.