Rachel Francois
Rachel Francois of 11 St James Hall recently appeared for the successful applicant, the Australian Securities and Investments Commission (ASIC), before Kennett J in Australian Securities and Investments Commission v Ferratum Australia Pty Ltd (in liq) (No 2) [2024] FCA 701 in the Federal Court of Australia. The Court ordered that Ferratum pay $16 million in civil penalties for contraventions of National Consumer Credit Protection Act 2009 (Cth) and the National Credit Code.
In an earlier liability judgment, Justice Kennett had held that Ferratum had charged prohibited fees, included prohibited terms in its credit contracts and failed to act honestly, efficiently and fairly.
In fixing the amount of penalty, Kennett J had regard to the nature and extent of the contraventions, the loss and damage suffered, and the need for deterrence. While credit contracts concerned only relatively small amounts of money, his Honour held that the “persistent and systemic” contraventions had affected vulnerable consumers.
In addition, his Honour took into account the control of Ferratum by its multi-national parent company, Multitude SE, and their indifference to regulatory compliance in Australia and the inadequate resource allocation to improving Ferratum’s systems. His Honour also noted Ferratum’s inadequate cooperation with authorities which were mostly delayed or incomplete, with Ferratum at one stage incorrectly asserting to ASIC that the practice of overcharging borrowers had been resolved in 2018. Ferratum also acted contrary to legal advice, which advised that their defence had no realistic prospects unless the “deficiencies in its process were addressed”. Ferratum had defended the proceedings until entering liquidation in April 2023.
Finally, Kennett J considered the “deterrence” principle, noting whilst there was no ongoing need to deter Ferratum (which was in liquidation), specific deterrence was necessary to discourage Ferratum’s parent company, Multitude SE, and similar entities from future conduct of a similar nature.
Read the judgement here: https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2024/701.html