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Key determinations


In February 2013, we issued our first Determination which considered the application of the responsible lending provisions contained in the National Consumer Credit Protection Act 2009 (the Act). Although the provisions came into effect on 1 July 2010 for organisations other than authorised deposit taking institutions (and 1 January 2011 for ADIs), it was always expected that there would be a time lag between the granting of a credit facility and a dispute coming to FOS.

The provisions of the Act relevant to this dispute required the financial services provider (FSP) to:

  • make reasonable enquiries about the consumer’s requirements and objective
  • make reasonable enquiries about the consumer’s financial situation
  • take reasonable steps to verify the consumer’s financial situation


While the FSP said that it made these necessary assessments in accordance with the Act, the supporting information it provided to us was very limited and did not confirm the FSP’s claim. Also, the supporting information contained some obvious discrepancies that the FSP should reasonably have investigated.

As a result, we decided that the FSP had not met its obligations under the Act.

We also took into account the fact that:

  • the Applicant had a limited education, and did not understand the nature of the agreement
  • the accompanying advertising material was misleading, and
  • the cost of the transaction was very high compared to the value of the goods.


For these reasons, we decided that the lease contract was unjust for the purposes of the National Credit Code.

We set aside the lease contract and released the Applicant from all associated obligations. The Applicant was allowed to keep the leased goods, and the FSP was required to pay to the Applicant the difference between the cost price of the goods and the amount of rental they had paid.

You can read the whole Determination here.