Australian Securities and Investments Commission v Membo Finance Pty Ltd (No 2)

The Australian Securities and Investments Commission (ASIC) sought relief against Membo Finance Pty Ltd and RGFS in relation to alleged contraventions of the National Consumer Credit Protection Act 2009 (Cth) and the National Credit Code. The dispute centred around the respondents' handling of hardship claims made by debtors during the COVID-19 pandemic, specifically whether they adhered to the statutory requirements outlined in section 72 of the Code. The Federal Court was tasked with determining whether ASIC's claims for declarations, pecuniary penalties, and injunctions were substantiated and warranted.

The primary legal issues involved whether the respondents breached specific sections of the National Consumer Credit Protection Act and the National Credit Code by failing to properly address hardship claims. Section 72 of the Code was central to the dispute, detailing the process for credit providers to follow when a debtor claims financial hardship. The court had to assess whether the respondents' actions, or lack thereof, amounted to admitted contraventions of the law. The court also considered the appropriate penalty for these breaches, including whether a single penalty should be imposed for multiple contraventions.

The court found that the respondents had indeed contravened the statutory provisions by failing to appropriately respond to the debtors' hardship claims. It was determined that the breaches were significant enough to warrant the penalties imposed, totalling $5.4 million between the two respondents. The court upheld that the penalties were justified, considering the nature and impact of the contraventions. Additionally, the court ordered the respondents to discontinue certain enforcement proceedings against debtors, ensuring compliance with the statutory timeframes and jurisdictional requirements. The court concluded that the relief sought by ASIC was justified and granted the declarations, pecuniary penalties, and injunctions as requested.

The final orders included substantial pecuniary penalties for the respondents, totalling $5.4 million, and mandated the discontinuation of certain enforcement proceedings. The respondents were also directed to pay the costs of the proceeding. These orders reflect the court's determination that the respondents' actions were in breach of consumer protection laws and necessitated significant remedial action.