Melbourne-based financial services and credit business, Financial Circle, has been ordered by the Federal Court to pay penalties of just under nine million for multiple breaches of obligations and consumer protection laws.
Financial Circle offered personal loans to consumers of up to $5,000 that could only be obtained if the consumer agreed to receive and implement financial advice, which typically recommended purchasing personal insurance products and switcher superannuation funds.
Consumers were also charged significant fees and the business received ongoing commission payments from insurers, which often resulted in an erosion of around 30 per cent of the client’s superannuation balance.
The Court found that the business had:
- Made false and misleading representations and engaged in misleading and deceptive conduct;
- Engaged in unconscionable conduct; and
- Breached its licensee obligations.
The Court ordered that, in addition to the pecuniary penalties, the business be permanently restrained from carrying on a financial services business, and from providing credit or entering into a credit contract as a credit provider.