Qld lender Firstmac breached laws

Queensland-headquartered non-bank lender Firstmac Limited has become the first company found guilty of breaching new laws designed to protect consumers.

The Federal Court today (July 10) found the Brisbane company breached the new design and distribution obligations (DDO) regime, which was introduced in October 2021.

The so-called DDO regime requires issuers and distributors of financial products to adopt a consumer-centric focus in designing, marketing and distributing financial products, and to distribute those products in a more targeted manner.

The Court found Firstmac had started a ‘cross-selling strategy’ of marketing investments in its High Livez, which is an investment product that Firstmac manages.

Firstmac had promoted the High Livez product to 780 consumers who held existing term deposits with Firstmac. In doing so, Firstmac breached its obligations under the DDO regime.

ASIC Deputy Chair Sarah Court said ASIC took the case to court because it was concerned that customers were exposed to the risk they might obtain a financial product that was not appropriate to their needs and objectives.

“This should act as a deterrent to anyone engaged in cross-selling financial products who fails to consider their design and distribution obligations before sending product disclosure statements,” Ms Court said. 

In handing down the judgment, Justice Kylie Downes found the steps which Firstmac took were inadequate to meet the statutory obligation imposed by the DDO legislation. 

ASIC says it will now seek penalties against Firstmac Limited. The proceedings have been listed for a case management hearing on 19 July 2024.

It’s not been a great 2024 for Firstmac with the company announcing in May that it announced it had experienced a cyber incident in which an unauthorised third party accessed a part of the company’s IT system.

Firstmac said its own investigations had identified evidence that some personal information of some of its customers has been accessed.