Barclay Finance, a company that is lending money at high-interest rates, threatened to take hold of a $60,000 car in a controversial dispute over a loan amounting to just $4,500.

The Australian Securities and Investments Commission (ASIC) has already received a “fat file” of complaints against Barclay but has not even initiated an investigation.

The reason why ASIC is hesitating to launch an investigation is because Barclay is operating in what is deemed to be an unregulated realm of finance: business loans.

While the potential for legal action especially with the allegations of unconscionable conduct, remains possible, proving that however, is an entirely different story altogether.

The Federal Government has claimed to be aware of Barclay’s method of operations for almost two years.

Back in 2015, the Government stated it would move to stop “unscrupulous operators from taking advantage of the vulnerable.”

However, not much has changed in the time that has passed and Barclay’s way of operations remains virtually the same. The Government meanwhile, has made no comment except to say that it was on a holding pattern regarding what ASIC’s response would be.

Consumer Action Legal Centre’s legal practice director Amanda Storey was quoted as saying in a report that Barclay’s business model took advantage of a “gap” to “potentially ensnare people who may not eligible for regulated credit.”

She added that it was “disappointing” that such a gap was even allowed to exist.

Victims, feeling helpless and backed into a corner, are being left with no other option but to share their stories to the media in search of a remedy.

Benjamin Bruin from Brisbane was allegedly in dire straits when he took a $5,840 loan from Barclay in February 2015 to support a new business. But he only received $4500; Barclay kept the rest for fees.

The total amount to be repaid over six months was $7,229, although that was not in the contract. In a consumer loan it would have.

Based on the amount that went to his bank account, the annualised interest rate was 121%, which is substantially higher than the limit on consumer loans.

The contract says “concessional rate” of interest per month was 3.96%; the “standard rate” was 10%.

Bruin failed to pay on some repayments and in July of 2016, Barclay began taking recovery action.

In a demand letter, the company said “we suggest you to payout the loan in full or surrender your vehicle to reduce the loan balance.”

The contract gave Barclay a claim on Bruin’s high-end Nissan Skyline, worth an estimated $60,000.

Bruin said he had already paid $7,800 but Barclay is asking for $7,580 more.

After news of this dispute went public, the loan was immediately settled without any further repayment and the caveat on the car has been removed.

Barclay also changed its name to Green Shore Pty Ltd.

A bad loan can cripple your finances. If you are having trouble managing your finances (and these days, who isn’t?), perhaps tapping the help of a professional would help. Here’s where the help of a financial planner can possibly get you and your finances on track.

 

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