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
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
