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Car finance warning The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking from Automotive Financial Services Pty Limited (AFS) in relation to one of its products known as the 'Credit Protection Waiver Program'. AFS is a credit provider offering finance to consumers for the purchase of motor vehicles. From July 1997 to October 2001, AFS also offered consumers the Credit Protection Waiver Program (the Program), which allowed consumers who purchased the Program to apply to have their loan repayments waived if they became disabled or unemployed, or died. ASIC came to the view that the Program was an insurance policy, and that purchasers were therefore entitled to greater consumer protection in relation to it. AFS did not accept that the Program was an insurance policy. 'The undertaking ensures that consumers who purchased the Program will be protected by having the same rights as consumers who deal with insurance companies, such as access to independent dispute resolution. It will also ensure consumers have the protections of the Insurance Contracts Act', ASIC's Executive Director of Consumer Protection, Mr Peter Kell said. The Insurance Contracts Act prevent insurers from denying claims where this would be unfair, such as in cases where there are unusual terms in the insurance policy that have not been disclosed or where a particular term operates unfairly.um. As a result of this undertaking, AFS has agreed to review all claims for waiver of repayments that were initially rejected. The claims will be reviewed by an independent consultant, who will assess them in accordance with the provisions of the Insurance Contracts Act. Where AFS incorrectly rejected a claim for waiver of repayments, the independent consultant can direct AFS to pay the claim and, if appropriate, also pay compensation to the borrower (for example, if the car was repossessed). Where borrowers made repayments while AFS was assessing their claim, AFS has agreed to refund these payments to the borrower, together with interest, where it originally failed to do so. |