Leaked report says BMW’s Australian finance company handed out big loans to low-income customers

A leaked Ernst and Young report has blasted BMW Finance for offering low-income customers loans to purchase expensive luxury vehicles.

According to The Age, the report says BMW Australia Finance gave $27,000 to a mother of 10 who had a zero hours work contract. The firm also offered close to $50,000 to a 76-year-old man using earning projections instead of his actual income.

Ernst and Young’s report says the actions weren’t isolated to a few cases but represented a wider "sales culture" in the Australian company that rewarded quick turnaround rather than sustainable business.

Earlier this year BMW Australia Finance was fined close to $391,000 (£231,000) for failing to properly examine the incomes of its customers and offering unsustainable loans. The latest fine followed an earlier one in 2015, which cost the firm $306,000 (£181,000).

Despite the fines, the report claims that BMW’s southern hemisphere company continued to reward salespeople that sold the highest-rate loans to customers. It said employees were paid between $375 (£222) and $8163 (£4830) per loan, depending on the interest rate agreed.

The Australian Securities and Investments Commission requested an investigation into BMW Australia Finance be carried out by Ernst and Young, and four reports are being produced. The first was leaked to Australian company Fairfax Media and has been the source of today’s information.

In an official statement, BMW Australia Finance said it was working "to ensure the company is updating its processes to meet all regulatory obligations". 

Autocar understands that BMW’s other finance companies, including the UK-based BMW Finance, have no involvement with the Australian division and the issues found in the report only relate to BMW Australia Finance.

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Comments
4

16 August 2016
Ernst and Young? Well they should know all about bad advice - weren't they the mob found guilty of not properly auditing Bernie Madoff?

17 August 2016
...John Oliver's show on HBO last Sunday had a feature on sub-prime auto lending in the US (it's available on YouTube). Santander and GM Financials are the main culprits - and some of what's going on is frightening.Looks like of repeat of the 2007/8 housing situation

17 August 2016
AU $27,000 is about £16k sterling.

What BMW can be bought for £16k? A base model 114i?

When we briefly looked at MINI, we could barely get a properly specced model (ie. one that matched or beat the spec of the outgoing Hyundai Getz) for less than £17k.

13 December 2016
This is a good way to monitor the dealings in the car financing industry in my opinion. If more companies aren't doing their due diligence in the respect of taking care of the customers' needs, the whole industry is just going to get a bad name. And these people are going to be so much worser off for it! Are businesses really so unscrupulous that they would stamp all over these poor people just for an extra sale?

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