Investment Co Fined for Misleading FSA, Client Money Breaches
Europe, Middle East and Africa
The UK Financial Services Authority (FSA) has fined Towry Investment Management Limited (Towry) £494,900 for misleading the FSA and for compliance breaches that “could have placed clients’ money at risk of potential loss or delay in distribution”. The FSA sent Towry a “Dear CEO” letter requesting the firm to ensure that it fully understood and was fully compliant with the FSA’s Client Asset Sourcebook (CASS) rules. Towry issued a response stating that it was fully compliant, but “failed to ensure the response was properly considered before submitting it to the FSA”. The FSA later discovered Towry to be in breach of the CASS rules, contrary to the misleading representations it made to the FSA.
FSA’s media release (29 September 2011)
Finance Co Fined $55,000
The New Zealand Competition Commission (NZCC) is urging small finance company lenders to “get up to speed with consumer law “, following the prosecution of eFeMCee Finance Ltd (FMC) and its director, Albert Loots for 40 breaches of the Credit Contracts and Consumer Finance Act 2003 No 52 and the Fair Trading Act 1986 No 121. On 29 September 2011 FMC and Mr were fined a total of NZ$55,475 in the Auckland District Court after pleading guilty to misleading customers and charging unreasonable fees for its services.
NZCC’s media release (3 October 2011)
(Source: NZCC; Legislation.gov.nz)
Eftpos Co Guilty of Misleading and Deceptive Conduct
The Federal Court has ruled in favour of grocery chain Aldi in ALDI Stores (A Limited Partnership) v EFTPOS Payments Australia Ltd  FCA 1114 (29 September 2011). The Court ruled that EFTPOS Payments Australia Ltd (ePAL) had engaged in misleading and deceptive conduct when it made statements that the new EFTPOS fee charges, which came into effect on 1 October 2011, would not be passed onto customers.
The court has ordered that ePAL publish corrective advertisements in national and state newspapers.
Related news items:
ABC News: Aldi wins eftpos fee case (29 September 2011)
ABC News: Eftpos customers face new debit card fees (30 September 2011)
(Source: AustLII; ABC News)
ANZ Overdraft Fees Class Action Hearing Begins
ABC News reports that the Federal Court has begun hearing a class action brought by 34,000 ANZ customers, aiming to “establish whether ANZ charges excessive fees to customers who run up overdrafts”. Reportedly, counsel for the plaintiffs Andrew Watson alleged that “for things like honour and dishonour fees on bank accounts, the actual costs to the bank associated with processing those things are much lower than with the penalties that are being charged”. Mr Watson reportedly said that the case would “answer important questions regarding the definitions within the contracts between ANZ and its customers of what is a fee or a charge”. According to The Age, customers are arguing that the fees should be considered as penalties, rather than as “a service charge for applying its discretion about extending credit or honouring overdrawn accounts” as claimed by the bank.
ABC News: ANZ overdraft fees challenged in court (4 October 2011)
The Age: ANZ in court over fees row (4 October 2011)
(Source: ABC News; The Age)
Loan Scam Companies Shut Down
The US Federal Trade Commission (FTC) has announced that a US district court has shut down related financial operations Residential Relief Foundation (RRF), Silver Lining Services and Mitigation America for a scam, which involved selling debt relief and loan modification services to clients which were never provided. According to the FTC, RRF “charged a [US]$1,495 up-front fee, advised consumers to stop making mortgage payments, and falsely claimed that reports they created would enable homeowners get the promised results”.
FTC’s media release (4 October 2011)