10:29 am, August 18, 2016
A LEAKED review of BMW Australia Finance has revealed it has been lending to customers with zero and negative disposable income.
Earlier this year, BMW Australia was found to be in breach of its credit licence and its finance arm was fined $697,000 (£409,000).
This resulted in the independent review – the first of four to be carried out and details of which were obtained by Fairfax Media.
Consultants Ernst & Young found that in one case BMW Australia Finance lent $27,000 (£15,800) to a single mother with 10 children, a zero-hours employment contract and negative disposable income.
In another case, it lent $23,300 (£13,700) to a refugee who had held a job for only one month. It also lent money based on earning projections rather than actual income in the case of a 76-year-old man, who received a loan of $50,000 (£29,300) – twice the value of the car he was buying.
According to the report, a ‘strong sales culture’ was to blame and employees were paid ‘unprecedented bonuses’. A salesperson would receive $375 (£220) commission for selling finance at the base interest of 5.49 per cent, but if they increased this to the maximum of 12.29 per cent the commission increased to $8,163 (£4,780).
Ernst & Young examined 100 BMW Australia files that it believed to be questionable and found 98 per cent were in breach of the country’s consumer credit code.
In an official statement, BMW Australia Finance said it was working ‘to ensure the company is updating its processes to meet all regulatory obligations’.
It’s unknown as yet what repercussions BMW Australia Finance will face.
There is no suggestion that BMW Finance operations in other countries – such as the UK – have been caught up in the affair.
MORE: Ford to sell fully autonomous cars in high volume by 2021
MORE: Tesla car catches fire during promotional event in France
MORE: Used Vauxhall Zafira B sales ‘may have been illegal if repairs not carried out’
On SuperUnleaded.com: Think Race Cars Are Cool? They’re Not So Great On The Road
