Australian Finance Direct Limited v Director of Consumer Affairs Victoria

Australian Finance Direct Limited (AFD) appealed to the High Court of Australia against a decision of the Supreme Court of Victoria, which had affirmed a determination by the Director of Consumer Affairs Victoria. The dispute concerned whether AFD had contravened provisions of the *Australian Consumer Law* (ACL) by engaging in misleading or deceptive conduct in relation to the supply of financial services. Specifically, the Director had found that AFD's marketing materials and practices led consumers to believe they were receiving a loan facility when, in reality, they were entering into a contract for the purchase of a 'financial product' which was a loan facility, and that this conduct was misleading.

The High Court was required to determine whether AFD's conduct in marketing its 'loan facility' product constituted misleading or deceptive conduct in contravention of section 18 of the ACL. This involved considering whether the representations made by AFD about the nature of the product and the transaction were likely to mislead or deceive consumers as to the existence or effect of a right or obligation. The court also had to consider the proper interpretation of the term 'financial product' as defined in the *Corporations Act 2001* (Cth) and its relevance to the consumer protection provisions of the ACL.

In their joint judgment, Hayne and Crennan JJ held that the Supreme Court of Victoria had erred in its interpretation of the relevant provisions. Their Honours found that the contract entered into by consumers was not merely for the purchase of a loan facility, but rather for the provision of a loan facility, which constituted a 'financial product' under the *Corporations Act*. Crucially, they determined that the representations made by AFD were not misleading or deceptive because they accurately reflected the nature of the transaction, which was the acquisition of a loan facility. The court emphasised that the focus should be on whether the representations were likely to mislead consumers about the essential character of the transaction, and in this instance, the consumers were acquiring a loan facility, which was precisely what was represented.

The High Court allowed the appeal, setting aside the orders of the Supreme Court of Victoria and the determination of the Director of Consumer Affairs Victoria.