ANZ agrees to $85 million settlement over alleged predatory car loans

One of Australia’s biggest banks has agreed to a whopping $85 million settlement over an alleged car loan fiasco.

Banking giant ANZ has agreed to an $85 million settlement over allegedly predatory practices in its former car loans business.

Maurice Blackburn Lawyers brought three separate class action lawsuits against ANZ, Westpac and St George Finance and Macquarie Leasing for their alleged misuse of flex commission arrangements, which were outlawed by the ACCC in November 2018.

Flex commission arrangements allowed car dealers to set interest rates and loan terms on car loans.

The law firm alleges the banks offered dealers a larger commission for higher interest rates and longer loan terms.

“The plaintiffs, on behalf of group members in these class actions, allege that flex commissions were unfair and unlawful and resulted in consumers paying higher interest rates on their car loans than they otherwise would have,” Maurice Blackburn states on its website.

“As a result, they are claiming compensation and other relief for those who have been affected.”

Maurice Blackburn national head of class actions Rebecca Gilsenan called the ANZ settlement a “historic win” for consumers who had paid far too much for their loans.

“We are very pleased to have achieved this result for consumers,” she said on Friday.

Banking giant ANZ has reached an $85m settlement with Maurice Blackburn over allegedly predatory car loan practices. Picture: Newswire / Gaye Gerard

“They had a right to expect that dealers were offering the best rate because they understand the roles of car dealers and lenders are distinct.

“We acknowledge that ANZ has now put this right for customers.”

The law firm’s trial against Westpac and St George Finance and Macquarie Leasing is scheduled for late October at the Victorian Supreme Court.

In a statement, ANZ said its settlement was “without admission of liability”.

“The Esanda class action related to the use of flex commissions in dealer arranged Esanda car loans in the period from January 1 2011 to March 31 2016,” the statement reads.

“ANZ completed the sale of its Esanda Dealer Finance portfolio in 2016.”

The bank also said it had reached a $14m settlement in a superannuation class action related to the investment of superannuation funds with ANZ when the company owned OnePath Custodians and OnePath Life.

“The settlements are without admission of liability and each remain subject to court approval,” the statement reads.

A Westpac spokeswoman told NewsWire the bank no longer paid flex commissions following the industry-wide ban in 2018.

“As the matter is before the court, we won’t be making any further comment at this time,” she said.