GE Capital Finance Australia is likely to pay a penalty of A$1 million as part of an agreement with the Australian Securities and Investments Commission. In the Federal Court in Sydney yesterday, lawyers from ASIC and GE outlined a set of agreed facts to Justice Peter Jacobson which centre on how, from 5 January to 27 May 2012, GE made false or misleading representations through phone calls and letters to customers implying they could not activate new credit cards unless they agreed to receive future invitations to raise their credit limits.The timing was important because the Gillard government's Fairer, Simpler Banking policy, which would prohibit unsolicited invitations to raise credit limits, was due to commence from 1 July 2012. According to ASIC, the perceived imperative to implement "an interim solution" to protect profits was the motivation for GE when it designed the phone and letter-based credit card activation process. ASIC's lawyer told the court that the changes in credit limit consent under the FSB policy would have cost GE up to $27 million. By bundling an agreement to consent to invitations for future credit limit increases, GE would have been hoping to claw back $6 million of those losses, on ASIC's calculations. On the agreed facts, the phone-based GE credit card activation system advised customers "you can withdraw your consent at any time" but then continued "please press 1 to proceed" to an activation that included future consent, with no other option specified. Similar "bundling" was apparent in the design of the letters, where only one per cent of the 21,000 customers who replied actively denied consent by crossing out the offending paragraph or writing on the form.In a statement of agreed facts, tendered to the court and outlined by ASIC's lawyer, GE admitted the contraventions, which carry a maximum penalty of a fine of up to $1.1 million. With breaches alleged in three categories, penalties could reach $3.3 million.Nonetheless, ASIC said, a penalty of just $1 million was recommended on the basis it was public policy to avoid lengthy court cases and unpredictable costs, and in the year to 31 December 2011, the after-tax profit reported by GE Capital Finance Australia was $116 million.ASIC's lawyer, refuting the argument by GE that this had been a "one-off" contravention, pointed to evidence collected by ASIC showing that GE had taken steps to deliberately pre-empt the intentions of the new FSB rules. For instance, at a customer relations workshop concern was raised over lack of express consent and on several other occasions GE's internal compliance warned that the scripts could be seen as misleading or pressuring customers to agree to future credit card increases.These comments were sent by GE's head of compliance to the legal department but no further action was taken, according to ASIC, which said this amounted to further evidence of a deliberate policy by GE. The parties had agreed that no customer consents for credit card increases obtained through this flawed process would be relied upon. GE also agreed to pay ASIC's legal