Broken Hill residents are among up to one million Australians taking part in what’s being dubbed as the largest consumer class action in Australian legal history.
Maurice Blackburn Lawyers are spearheading the Flex Commission class actions, a series of lawsuits focused on commissions that were paid to car dealers by several major banks, including Westpac Banking Corporation and St George Finance, Australia and New Zealand Banking Group Limited (Esanda), and Macquarie Leasing Pty Ltd.
According to Andrew Watson, National Head of Class Actions at Maurice Blackburn Lawyers, these commissions were related to consumer car loans and were a common practice until they were banned in 2018.
Mr Watson went on to outline the system as an “outrageous practice” and said “there was a secret arrangement between the banks and the car dealer so that there was an incentive for the car dealer to charge the highest interest rate they possibly could”.
“Banks would offer a ‘base’ rate, and then dealers were free to increase that interest rate and receive a commission on the increased amount,” Mr Watson said.
The stakes are high, as Mr Watson revealed: “For every percentage point above the banks’ base rate, the car dealers would receive about three quarters of the difference”.
“The banks and the dealers were incentivised not to give you the best rate, but to give you the very worst rate. It was never revealed to consumers when they were getting their loans,” he said.
In some instances, this resulted in people facing bankruptcy due to the high-interest loans.
“Some dealers were making as much money from the flex commissions as they were from the actual sale of the vehicle. And these arrangements were all approved by the banks,” Mr Watson continued.
Locally, the news has had a significant impact.
One resident, who wished to remain anonymous, obtained their car loan through Far West Auto in 2016.
“I got my loan through Far West Auto in 2016, who used Macquarie Leasing,” the resident said.
“Because it was my first new car, I didn’t even shop around; I just went for it.
“At first, I thought it was a scam. I got a text message and an email. When I recognised the loan company, Macquarie Leasing, I thought… wait a minute—this might be legitimate, so I signed up for it.”
If you believe you are affected by this issue, you are encouraged to register by signing up on the Maurice Blackburn website.
Deadlines are fast approaching, and the court has ordered the banks to send out opt-out and registration notices to one million customers as of last August.
For more information, visit the Maurice Blackburn website, and stay tuned for continuing updates on this massive consumer class action that hits close to home for people from the Silver City.