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The Federal Court has handed down penalties to the business lender Green County and its loan introducer Max Funding after having found they engaged in unlicensed credit activity.
In Thursday’s decision (11 December), the court imposed a $405,000 penalty on Green County for unlicensed credit activity and breaches of the National Credit Code (NCCP), while Max Funding was fined $110,000 for engaging in unlicensed credit activity. Neither entity has ever held an Australian credit licence, as their predominant business was for business lending (not covered by the NCCP).
The penalties follow April’s judgment, where the court ruled the companies had engaged in unlicensed credit activity and failed to uphold basic consumer protections. As previously reported, the case centred on four loans made to two borrowers, where Green County and Max Funding relied heavily on business purpose declarations rather than conducting proper inquiries into whether the loans were genuinely for business use.
The severity of the problem ranged across the different loans for the two borrowers.
For example, the court heard that one borrower reportedly agreed to Max Funding's application terms and conditions, including by signing a declaration acknowledging that the loan was to be predominantly used for a business purpose. However, the borrower had no intention at the time to start any such business or any other business. Instead, the $2,000 loan was used for gambling. The judge found that while Green County and Max Funding should have made deeper inquiries into the borrower’s loan purpose, those inquiries wouldn’t have revealed the true (Code-related) purpose because the borrower intentionally misled them.
However, the judge said that Green County and Max Funding then failed to make adequate inquiries and relied on false statements when issuing both the second and third loans, despite clear red flags showing the borrower had no business and was using funds for gambling and personal debts. Because no business purpose declarations were obtained, the statutory presumption applied, resulting in multiple contraventions of the Credit Code and NCCP Act, including providing credit without a licence and exceeding the allowable cost rate. The court found the third loan the most serious breach, as the lenders knew by then that the borrower had a gambling addiction and no intention of running a business, yet still advanced further credit without explanation.
The second borrower also applied for a $2,000 loan from Max Funding, claiming it was for a seafood business that they had planned to start. Instead, however, they used the funds for personal and household expenses. Again, the judge found that Green County and Max Funding failed to make adequate inquiries despite clear indicators that the borrower’s stated business purpose was false, leading to multiple contraventions of the Credit Code and NCCP Act for the first and second loans. (However, the loans were later discharged after it was confirmed the borrower did not operate a business).
The ruling reinforces the court’s earlier findings that both companies failed to make reasonable inquiries to confirm the purpose of the loans, meaning the borrowers were wrongly denied key consumer protections such as disclosure requirements, interest-rate restrictions, hardship support, and access to external dispute resolution.
ASIC began proceedings in March 2023, alleging that Green County and Max Funding operated a lending model that attempted to classify consumer loans as business loans by relying on signed declarations rather than substantive verification. In its liability judgment, the court agreed, stressing that lenders cannot avoid licensing obligations simply by relying on paperwork when circumstances demand deeper scrutiny.
However, the judge outlined that in the period from 21 February 2018 to 4 May 2021, Green County provided a total of 4,150 loans and it was only in respect of four of these loans, made to two borrowers, that contraventions were ultimately found.
He outlined that neither company had intentional, deliberate, conscious or "contumelious disregard" of the requirements of the NCCP Act. To the contrary, he stated that their intention was to ensure that their business activities would not require them to comply with the NCCP Act.
However, both Green County and Max Funding came to contravene the NCCP Act and the judge said it was there necessary to have regard to how that happened and, (to the extent it is possible to discern), why it happened by reference to the respective consumers in question.
In handing down his decision, Justice Shariff said: “Although not deliberate conduct, neither Green County nor Max Funding made adequate inquiries to scrutinise the materials they were provided, given those materials begged many questions.”
He said: "I accept the nature of the contraventions here were at the lower end of the range of objective seriousness, but the positioning of the contraventions in this way should not be seen as lessening what were nonetheless serious contraventions."
He added that the effect of that regulatory regime “brings into sharp focus that those lenders who intend to engage in the business of non-code lending and non-code credit activity have to exercise considerable care and give attention to the circumstances of each relevant consumer in respect of whom credit is to be advanced”.
The regulator has previously flagged this matter as part of its ongoing focus on misconduct posing a high risk of significant consumer harm – and said this week’s penalties cement the seriousness of the breaches.
Speaking after the penalties were handed down, ASIC deputy chair Sarah Court commented: “Green County and Max Funding failed to properly inquire about the true purpose of loans issued to two vulnerable borrowers. As a result, those borrowers did not benefit from the important protections available under the Credit Code.
“The matter sends a message to credit providers that relying on business purpose declarations without making reasonable enquiries is not good enough and highlights the ongoing work ASIC is doing as part of our enduring priority to stop misconduct involving a high risk of significant consumer harm.”
[Related: Federal Court rules business lender breached credit laws]