The class action alleges the two banks engaged in predatory lending practices that stung consumers with unfair high-interest loans.
At 25-years-old, and working as a teachers’ aide for students with a disability, Alannah Fox visited a Hyundai dealership 10 years ago looking to buy an ix35. She was looking to upgrade after her old Holden Berlina had clocked up 200,000 kilometres.
The ‘flex commission’ arrangement was a feature of the car industry for more than 25 years when it was banned by the corporate regulator in 2018 because it led to consumers paying excessive interest rates on their car loans.Fox is the lead plaintiff in a class action against Westpac and its subsidiary St George Finance Limited that began in the Victorian Supreme Court on Monday.
Flex commissions were paid by lenders to car finance brokers – typically car dealers – allowing the dealer to set the interest rate on the car loan, which were not determined by objective criteria, such as credit risk. The higher the interest rate, the larger the commission earned by the dealer.The court heard Fox bought an ix35 for $38,000 after managing to negotiate down the price.
“I felt very rough throughout my conversation with as the focus is on the signing of the documents,” Fox wrote in her affidavit, which was read out to the court by barrister Jeremy Stoljar.“I didn’t have time to read them. I did not have any real time to review them. I was not told about or directed to any of the following matters … The car had been modified and prepared according to my request, and was waiting for me in the car yard to drive away.
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