The revised logo of German carmaker Volkswagen AG is pictured during a preview of the world’s biggest automaker at the international Frankfurt Motor Show IAA in Frankfurt, Germany September 9, 2019. REUTERS/Wolfgang Rattay
December 19, 2019
(Reuters) – Australia’s corporate watchdog said on Friday it had begun civil penalty proceedings in Federal Court against a unit of Volkswagen AG <VOWG_p.DE> for allegedly not making appropriate checks before giving out 49,380 loans to consumers.
The Australian Securities and Investments Commission (ASIC) has alleged that Volkswagen Financial Services Australia Pty Limited did not make required inquiries into borrowers’ living expenses or if the loans were unsuitable for them.
Volkswagen’s unit did not immediately respond to a Reuters’ request for comment.
The German carmaker’s unit operates nationally to provide borrowers with consumer loans to purchase new and used cars.
ASIC alleged these instances of breaches in lending laws occurred between Dec. 20, 2013 and Dec. 15, 2016.
The maximum penalty for one contravention equates to A$1.7 million ($1.17 million) in the period till July 31, 2015, and to A$1.8 million for a contravention in the period after that, the watchdog said.
In the statement, ASIC Commissioner Sean Hughes said it was “entirely the responsibility of credit providers to properly assess whether the consumer has the capacity to service the loan without incurring substantial hardship”.
ASIC said the proceeding will be listed for the first hearing on a date to be determined by the court.
(Reporting by Rashmi Ashok in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli)
