[Paul-Bracq-BMW]

From the motor report: http://www.themotorreport.com.au/644...viceable-loans

Basically BMW Australia approved loans for people who could not afford them... No wonder I was surprised there were so many BMW's when I moved here...

BMW Australia is currently the focus of international automotive media attention after incurring a $77 million bill from corporate watchdog the Australian Securities & Investment Commission (ASIC).

The findings relate to loans underwritten by BMW Australia Finance Limited to customers who could not afford them.

BMW Australia must now compensate more than 15,000 customers who may have suffered financial hardship between January 2011 and August 2016.

According to a statement from ASIC, Deputy Chairman Peter Kell said: “BMW Finance had a sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many customers."

Newsagency Reuters reports this is Australia’s largest ever consumer credit radiation program.

BMW must pay $50 million towards the write-off of the loans and smaller sums will be paid for compensation, interest rate reductions on existing loans, and initiatives to ensure customers receive improved understanding of the agreements they sign.

BMW Australia said it is working with ASIC to ensure its practices comply with Australian laws.

[SakhirM4]

Originally Posted by Paul-Bracq-BMW

From the motor report: http://www.themotorreport.com.au/644...viceable-loans

Basically BMW Australia approved loans for people who could not afford them... No wonder I was surprised there were so many BMW's when I moved here...

BMW Australia is currently the focus of international automotive media attention after incurring a $77 million bill from corporate watchdog the Australian Securities & Investment Commission (ASIC).

The findings relate to loans underwritten by BMW Australia Finance Limited to customers who could not afford them.

BMW Australia must now compensate more than 15,000 customers who may have suffered financial hardship between January 2011 and August 2016.

According to a statement from ASIC, Deputy Chairman Peter Kell said: “BMW Finance had a sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many customers."

Newsagency Reuters reports this is Australia’s largest ever consumer credit radiation program.

BMW must pay $50 million towards the write-off of the loans and smaller sums will be paid for compensation, interest rate reductions on existing loans, and initiatives to ensure customers receive improved understanding of the agreements they sign.

BMW Australia said it is working with ASIC to ensure its practices comply with Australian laws.

This is really absurd and shows the world we live in. BMW has to compensate people because they took out loans that they could not afford??

[dtwyim]

Originally Posted by SakhirM4

This is really absurd and shows the world we live in. BMW has to compensate people because they took out loans that they could not afford??

Took the words right out of my mouth....

[Questofthetune]

Gotta remember that many folks out there don't have a good understanding of finances

[Paul-Bracq-BMW]

Originally Posted by dtwyim

Took the words right out of my mouth....

The point is BMW approved those loans even though they knew they should have rejected them because these people could not afford them. Then they have to compensate the same people... How stupid is that??

[Dat Aus]

Originally Posted by SakhirM4

This is really absurd and shows the world we live in. BMW has to compensate people because they took out loans that they could not afford??

Australia has significantly stricter laws regarding corporate and director responsibility than the US does. We tend towards consumer protection rather than corporate protection.

I haven't read the ASIC report for this case, but I'd be willing to bet that BMW Australia were approving loans they knew the loanees would struggle to repay in a bid to increase sales, which obviously reflects positively on the company and impresses stakeholders. Then when the loanees default on their payments, BMW repossess the car and don't suffer any loss.

Meanwhile, the consumers are left without a car, are facing potential legal action and have their credit ruined which negatively impacts their lives in other ways.

It's easy to dismiss this as being a reflection of the absurd, entitled, nanny-state "world we live in" these days but there is sound reasoning behind it. Let's not forget, it was this exact activity that led to the collapse of Lehman Brothers and the 2008 GFC.

Are the people irresponsible and stupid for taking out loans they can't afford? Yes. Of course.

Are BMW also irresponsible dicks for approving those loans with the knowledge they are completely protected and won't suffer loss from a default? Absolutely.

[David70]

So BMW has the car and a person comes in and buys the car with a loan. BMW decided the risk that they wouldn't get paid back was small enough to give them the loan. The customer decided they could afford the loan.

Then the government decided that both BMW and the customer were wrong, the loan was too much for the customer and BMW owes the customer more money.

Glad to see this wasn't in the U.S. I am for personal responsibility and making my own financial decisions and don't need the government to tell me or BMW what I can afford. If someone wants to live in their mom's basement and drive an M3 the government tells BMW not to allow it because the government decided they don't make enough money?

[Paul-Bracq-BMW]

Originally Posted by David70

So BMW has the car and a person comes in and buys the car with a loan. BMW decided the risk that they wouldn't get paid back was small enough to give them the loan. The customer decided they could afford the loan.

Then the government decided that both BMW and the customer were wrong, the loan was too much for the customer and BMW owes the customer more money.

Glad to see this wasn't in the U.S. I am for personal responsibility and making my own financial decisions and don't need the government to tell me or BMW what I can afford. If someone wants to live in their mom's basement and drive an M3 the government tells BMW not to allow it because the government decided they don't make enough money?

Well, that's why the US was at the origin of the GFC with the subprime loans and Australia was the only major economy to have avoided going into recession because of it. The idea of unregulated pure capitalism may have made lots of rich people but at the same time made millions of people poor... Not all government decisions are bad and you have missed the point here. the point is BMW finance approved loans to people who should have been rejected because they were too risky. laws in Australia are made that way to avoid the financial system going down because of such practices. in fact there actually are calls to have investigations into banks doing such practices right now. Nothing wrong with it for the interest of the taxpayers who always have to pay for the bill when things go wrong in a large scale. Exactly what happened in the US with all the borrowing and bailouts ahfter the GFC... One of the reasons the US is in so much debt and Australia not.

[8k4]

Wow I should be buying shit at Cartier then claiming they took advantage of me, ffs

[David70]

Originally Posted by Paul-Bracq-BMW

Well, that's why the US was at the origin of the GFC with the subprime loans and Australia was the only major economy to have avoided going into recession because of it. The idea of unregulated pure capitalism may have made lots of rich people but at the same time made millions of people poor... Not all government decisions are bad and you have missed the point here. the point is BMW finance approved loans to people who should have been rejected because they were too risky. laws in Australia are made that way to avoid the financial system going down because of such practices. in fact there actually are calls to have investigations into banks doing such practices right now. Nothing wrong with it for the interest of the taxpayers who always have to pay for the bill when things go wrong in a large scale. Exactly what happened in the US with all the borrowing and bailouts ahfter the GFC... One of the reasons the US is in so much debt and Australia not.

If the government doesn't allow me to waste my money on things I shouldn't buy then I will be better off for it? Some group in the government decides what the people can afford and tells BMW when to give loans and when not to? That's pretty much it?

The U.S. subprime loan problem happened because companies could lend money to people that couldn't afford the loans and then sell them to other companies claiming they were good loans. If they had been required to hold the loans they wouldn't have made the bad loans in the first place. It's self regulating if you have to hold the loans and won't be bailed out.

[Dat Aus]

Originally Posted by David70

If the government doesn't allow me to waste my money on things I shouldn't buy then I will be better off for it? Some group in the government decides what the people can afford and tells BMW when to give loans and when not to? That's pretty much it?

The U.S. subprime loan problem happened because companies could lend money to people that couldn't afford the loans and then sell them to other companies claiming they were good loans. If they had been required to hold the loans they wouldn't have made the bad loans in the first place. It's self regulating if you have to hold the loans and won't be bailed out.

Exactly. BAD LOANS. Regardless of whether they are being bundled with good loans and sold as such, they are still bad loans and it was still the predatory nature of such loans that downed the global economy. Regardless of whether the bad loans were sold off as good loans or not, they were still bad loans that should never have been approved.

The US doesn't have laws to prevent such loans from being approved. Australia does. BMW Australia breached those laws and they got sprung.

[Law]

Originally Posted by Paul-Bracq-BMW

Well, that's why the US was at the origin of the GFC with the subprime loans and Australia was the only major economy to have avoided going into recession because of it. The idea of unregulated pure capitalism may have made lots of rich people but at the same time made millions of people poor... Not all government decisions are bad and you have missed the point here. the point is BMW finance approved loans to people who should have been rejected because they were too risky. laws in Australia are made that way to avoid the financial system going down because of such practices. in fact there actually are calls to have investigations into banks doing such practices right now. Nothing wrong with it for the interest of the taxpayers who always have to pay for the bill when things go wrong in a large scale. Exactly what happened in the US with all the borrowing and bailouts ahfter the GFC... One of the reasons the US is in so much debt and Australia not.

Exactly this. Particularly the bold.

Guess who pays for the bailouts and all the cleaning up when sh!t hits the fan?

Lemon socialism...

[Paul-Bracq-BMW]

Originally Posted by David70

If the government doesn't allow me to waste my money on things I shouldn't buy then I will be better off for it? Some group in the government decides what the people can afford and tells BMW when to give loans and when not to? That's pretty much it?

The U.S. subprime loan problem happened because companies could lend money to people that couldn't afford the loans and then sell them to other companies claiming they were good loans. If they had been required to hold the loans they wouldn't have made the bad loans in the first place. It's self regulating if you have to hold the loans and won't be bailed out.

Unfortunately some of us are not smart and are taken advantage of, so if the government provides some sort of protection by regulation, then the better for it. Heck even the smart ones can be defrauded. For example if we never had protection against fraudulent use on our credit cards, then we'd be in trouble ;-). About the subprimes, a simple law would have protected these people, and ultimately the rest of the US taxpayers, from not allowing them to access those loans because of their credit situation... we can debate capitalism forever, but the fact is historically hard capitalism is a flawed system as the great depression, the dot com crash and GFC have proved: too much greed always end up badly.