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Car customers get $72.7m of refunds

Car customers get $72.7m of refunds

Australia’s financial services regulator has targeted ANZ, Allianz, Suncorp and National Warranty Company for unacceptable car loan, insurance and warranty practices.

ASIC said it had started civil penalty proceedings in the Federal Court against ANZ, with the first hearing scheduled for 2 February.

The regulator said ANZ’s former car finance business, Esanda, had breached responsible lending rules when it approved certain car loans from three broking businesses.

ANZ will remediate approximately 320 car loan customers for loans taken out through three broker businesses from 2013 to 2015, totalling around $5 million. The loans are likely to have been affected by fraud,” according to the regulator.

“ASIC alleges that between 25 July 2013 and 12 May 2015, ANZ failed to meet its responsible lending obligations when relying only on payslips included in 12 car loan applications to verify the consumer’s income, in circumstances where it knew that payslips could be easily falsified and it had reason to doubt the reliability of information from the particular broker businesses.”

Commissions led to bad sales practices

ASIC also announced that National Warranty Company (NWC) had broken the rules on conflicted remuneration when issuing commission incentives for the sale of car warranties.

“NWC sales staff had the discretion to set the price for the warranty, which was directly linked to their sales commission. The more expensive the warranty, the larger the sales commission,” the regulator said.

“In response to ASIC’s concerns, NWC will refund 6,367 warranty customers the difference (including interest) between what they paid and the cheapest price at which the dealer sold that, a total of approximately $4.9 million.”

The refunds apply to some warranties sold between 1 July 2013 and 28 May 2015.

Car buyers sold dud add-on insurance

Meanwhile, Suncorp will refund $17.2 million to 41,428 add-on insurance customers “for insurance bought through car dealerships that provided little or no value to consumers”.

The insurance was provided by MTA Insurance, which is owned by Suncorp.

ASIC found that, between 2009 and 2017, some customers were sold add-on insurance on which it was “unlikely” they would ever have been able to make a claim.

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Insurance problems keep adding up

Allianz Australia Insurance will also refund $45.6 million to 68,000 customers “for add-on insurance sold through car dealerships that were of little to no value”.

The refund program covers four Allianz add-on insurance products sold between 1 December 2010 and 30 November 2017, according to the regulator.

ASIC’s concerns included customers being “sold a policy they would be ineligible to make a claim on” or “sold a higher and more expensive level of cover than needed”.

Allianz will also make a community benefit payment of $175,000 to a financial literacy organisation.

Customers deserve a fair go

ASIC acknowledged that ANZ, National Warranty Company, Suncorp and Allianz had all cooperated with its investigations.

ASIC acting chair Peter Kell, speaking on the Suncorp matter, said that add-on insurance has been in the regulator’s sights for some time.

“Insurers should be taking active steps to ensure their customers are not being sold products that provide little or no value,” he said.

“ASIC’s work on add-on insurance is all about making sure customers are being sold insurance that meets their needs, and if they haven’t, are appropriately remediated.”

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Learn more about car loans

How to get a chattel mortgage?

Both businesses and individuals may use a chattel mortgage, provided that the car is being used predominantly for business purposes. 

To apply for a chattel mortgage, you need to first consider your options and choose a suitable lender that meets your requirements. Once you have selected a lender, you can apply for the loan online by filling out a form. If the lender doesn’t offer an online application process, you can either call them or visit their nearest branch. 

After you’ve applied, the lender will ask you to supply documents that confirm your identification, income, job profile, etc. If everything is in order, most lenders will arrange the loan’s settlement, so all you need to do is pick up your car!

Does my insurance cover other cars I drive?

If you’re driving someone else’s car, say your friend’s, and you’re involved in an accident, whose insurance is responsible, yours or your friend’s? Does car insurance cover driving other people’s cars?

The short answer is yes. A few car insurance providers offer insurance cover for people to drive someone else’s car. It’s always better to double-check this before you get behind the wheel.

If you’re not covered, you can opt for non-owner car insurance which lets you drive someone else’s car and be protected against liability. However, you will not benefit from other coverage such as damage to the vehicle, replacement rental or medical expenses.

Getting comprehensive insurance driving other cars can be done with temporary insurance. It’s recommended that you do this if you plan to drive someone else’s car, even for a short duration. You can choose between policies that cover you for a fortnight, a month or even a pay-as-you-drive option with temporary insurance.

Alternatively, you can ask the car’s owner to check with their insurer if you can be added to the policy. This will ensure that you are covered fully with comprehensive car insurance driving other cars. Do note that adding you could increase the annual premium for the owner.

What is comprehensive insurance?

Comprehensive insurance protects you in the event you’re responsible for a car accident. Policies vary from provider to provider, but comprehensive insurance generally covers you for damage to your car and property, as well as the other parties’ cars and property. A comprehensive insurance policy may also protect you from theft, vandalism and natural disasters.

How much is your car worth?

If you already own a car, you could potentially bring down the cost by selling your car in the process. Before that happens, though, you’ll need to find out how much your car is worth.

One of the first places to find this value is to research the value of your current car, giving you an idea of roughly how much it’s worth in its peak condition.

There are plenty of websites that offer a free online valuation, allowing you to enter your car’s make, model, year, badge and description, with results listing a price guide based on both selling your car privately and through a dealership.

Of course, dealerships will try to profit on your trade-in by buying it for less than they can sell it, making it highly unlikely that you’ll get the same price selling a car to a dealer as you would selling a car privately.

However, private car sales can be costly and can take months to sell, making car trading more convenient with a guaranteed return, even if you may not be able to realise the total value of your car’s worth.

Remember that everything is negotiable. If the dealership is offering you less for your trade than you wanted, try to negotiate elsewhere to gain that money back. Start by negotiating on the price of the trade and then ask them if they can give you a further discount on your new car.