ASIC action ends badly for Christopher John Riotto
Two companies owned and controlled by former NSW President of the Finance Brokers Association of Australia, Christopher John Riotto, have been found to have engaged in "unconscionable and misleading conduct" by the Federal Court.
Sydney-based firms the Australian Lending Centre Pty Ltd and the Sydney Lending Centre Pty Ltd are finance broking companies that brokered business loans for borrowers who were seeking personal loans, according to the Australian Securities and Investments Commission (ASIC).
ASIC brought proceedings on behalf of five clients of the two companies, and in four of the cases the companies knowingly had their clients sign business loans when they wanted personal loans, effectively removing consumer protections provided by the Uniform Consumer Credit Code.
The court also found that the companies represented to lenders that the loans were for business purposes, according to ASIC.
"ASIC's action signals to brokers that attempts to circumvent the legal protections available to consumers will not be tolerated," said ASIC commissioner Peter Kell.
In one of the cases, the court found a loan was secured for a client over his house when the broker knew the client could not afford the repayments - something that has previously been referred to by the court as "asset lending".
Another company also owned and controlled by Riotto, AMR Investments Pty Ltd, was found to have exploited a pensioner with a clearly identifiable disability by having him sign a loan with an interest rate of 5 per cent per month, which was secured over his only asset.
However, in this case the court accepted that the loan was for business purposes.
The "unconscionable and misleading conduct" took place between 2005 and 2008.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
