The Australian Securities and Investments Commission has commenced proceedings against finance company Solvar in the Federal Court, alleging that its subsidiary Money3 Loans breached its responsible lending obligations. According to ASIC’s statement of claim, between 2019 and 2021 vehicle finance provider Money3 failed to properly assess whether certain borrowers could meet their repayment obligations before entering into loan contracts for the purchase of second-hand vehicles. The consumers were either receiving Centrelink payments or were on low incomes, which is the situation for a substantial proportion of Money3 customers. In its statement of claim ASIC says the company’s serviceability assessment involved obtaining bank statements, Centrelink statements, application forms prepared by a broker and a credit report.  The regulator alleges that Money3 did not make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract – in particular, whether the consumer wished to obtain finance for add-on fees on top of the price of the vehicle. It also alleges that Money3 did not make reasonable inquiries or take reasonable steps to verify the consumer’s financial situation, including their likely expenses, and that instead it applied a number of arbitrary expense amounts from an internal guide. ASIC alleges that each of the consumers involved would have been unable to comply with their financial obligations under the contract or could only comply with substantial hardship. Solvar said in a statement that it will defend the proceedings. It said: “Money3 has reviewed the claims and is of the view it has appropriate processes in place in relation to responsible lending, training programs and system that comply with its legal obligations.”