Australian Securities and Investments Commission v Money3 Loans Pty Ltd

1. Money3 submits the assessment that it did conduct concluded that it was not likely that the consumers would be unable comply with their financial obligations under the credit contract or could only comply with substantial hardship. ASIC has not established to the contrary at the time of the assessment and entry into the credit contract.

1. Submission (a) does not advance the case and may be put aside. Submission (b) steps outside of the pleaded case as set forth in the ASIC particulars of 31 July 2023, which put the case on the basis of the combined income of $1,444, comparable HEM expenses of $783.75, non-HEM comparable expenses of $510 and a weekly surplus of $74.40. Once again, ASIC must be held to the pleaded case. For the same reason, submission (c)(vi) is not the pleaded case. Submission (d) is inconsistent with submission (b), which inconsistency ASIC fails to explain, but for the same reasons steps outside of the pleaded case.
2. As to the multi-faceted submission (c), sub paragraphs (ii) and (iv) comprise expenses that were considered in the APL capacity calculation. As to subparagraph (iii), the expense of $40 per fortnight for the rental of a refrigerator is a recurring electronic transfer that is disclosed in the separate account of Consumer 5 (for example CB 3415). There is no mention of this expense in the APL capacity calculator. This amount is included in the ASIC particulars of 31 July 2023 as a component of the combined amount of disclosed debt of $75.85 per week. Thus ASIC has established that this expense was not considered when conducting the unsuitability assessment. However, that is not the end of the matter. No attempt was made by ASIC to challenge Ms Costantini as to this omission and whether it may have impacted the unsuitability assessment. Nor was it put to her that the Product Guide minimum amounts for home and utilities in the weekly amounts of $32 for each of the consumers was insufficient to cover this payment, as well as other home and utility expenses. Having not pursued that issue with Ms Costantini, it is not in my view open to ASIC to raise this matter in final submissions.
3. Sub paragraphs (i) and (v) of submission (c) are related and may be considered together. It follows from my earlier findings that the cash withdrawals were not inquired into or verified. But it does not follow that Money3 also failed to conduct the unsuitability assessment as to whether the consumers will be unable to comply with their financial obligations under the credit contract, or could only comply with substantial hardship. I have explained why I reject that submission in my reasons for Consumer 1: this is a separate statutory obligation. Further, the consumers had excellent credit scores and no history of prior material credit default. As Mr Hartman accepted in cross examination, they were "good at managing their finances" (T 324). The review that was undertaken of the bank statements did not disclose poor banking conduct. They had a demonstrated history of being able to service the regular debts by making payments on time.
4. Also from a review of the bank statements, the same day account clearing submission is not made out. What is demonstrated is that the consumers would regularly withdraw cash on the day, or the day after, the receipt of credits from Centrelink (CB 3399-3405, 3414-3416). The accounts were not cleared, or nearly so, of funds. The inference that clearly can be drawn is that they used cash to pay for their living expenses.
5. Thus, I am not satisfied that ASIC has made out these components of its submissions.
6. Finally, submission (e) requires acceptance of the untested affidavit evidence of Consumer 4. I do not place weight on that aspect of the evidence because it is not consistent with contemporaneous documents and there is no explanation how he apparently reached the reconstruction of his average weekly expenses of $1,434.05, with the assistance of a representative from FRLC. Further, it would be distinctly unfair and prejudicial to act on that untested evidence. The latter part of this submission overlooks where the onus of proof lies.

1. Consumer 6 made an affidavit on 15 May 2023 and appeared in person on 7 February 2025. She was cross-examined. At the time of her application to Money3, Consumer 6 was a single mother with two dependant children aged under 9 years. Her sole source of income was Centrelink payments and child support payments from time to time. She has been unemployed since 2011 and lives in community housing provided by Aboriginal Housing Victoria.
2. Consumer 6 did not have a car and lived about 20 minutes out of town. She required transport for her children to get school and to attend medical appointments. In 2019, Consumer 6 attended a Bendigo Bank branch to inquire about obtaining a car loan and was told that she could not because Centrelink payments were her only source of income. In around August 2019, Consumer 6 started saving for a car.
3. On 2 September 2019, Consumer 6 attended a caryard with a friend and found a car she wanted to purchase. Consumer 6 told the salesman that her only income was Centrelink payments. The salesman made a telephone call to a finance broker, Car Finance 4 You, and introduced Consumer 6 to a representative. The representative asked Consumer 6 about her income, including her weekly expenses. Consumer 6 provided rough estimates of her expenses and said that she had around $250 left each fortnight after expenses. During the call, the representative told Consumer 6 she could take out an optional three year extended warranty, which would make the loan repayments $107 per week. Consumer 6 agreed. It is Consumer 6's evidence that the representative told her about the terms of the loan, but did not tell her that she would need to borrow money to cover other costs, such as fees.
4. While Consumer 6 was at the caryard, the representative sent her an email requesting the following documents in order to "complete her application": (1) a copy of her rental agreement; (2) Centrelink statement; and (3) three months of bank statements. The email included a link to bankstatements.com.au and instructed Consumer 6 to click the link and follow the prompts to provide the broker access to her bank transaction history and Centrelink statement. Consumer 6 provided access to these documents. On 2 September 2019, Consumer 6 signed a 'Privacy Disclosure and Consent' form for Car Finance 4 (CB 1832, 3782-3784).
5. On 2 September 2019, Consumer 6 signed a 'contract for sale of used motor vehicle' at a price of $10,402.30 (CB 1832, 3785-3786). On 2 September 2019, she paid "most of" the deposit on the vehicle.
6. On 3 September 2019, Car Finance 4 You submitted a loan application for Consumer 6 directly through Money3's API platform. The API platform allowed brokers with a login to transfer information and documents from their own loan application platform directly into Money3's APL system. As the loan application was submitted by the broker directly, there was no application form for Consumer 6 to sign. Car Finance 4 You entered the following note on the API platform: "Single application Other Employment has not Real Estate Asset without Guarantor" (CB 1807, N Tab 596 rows 2 and 3). Car Finance 4 You directly entered income and expense information into the Money3 API system. The following income and expenses (totalling $322.5) were recorded (CB 3851):

(a) Income:

(i) $379.40 fortnightly for Centrelink Part A

(ii) $293.46 fortnightly for Centrelink Part B

(iii) $924.10 fortnightly for Centrelink Parenting

(b) Expenses:

(i) $3.17 fortnightly for LSA (loan)

(ii) $100 weekly for dependants

(iii) $1,250 monthly for general living expenses

(iv) $169.65 weekly for rent

(v) $64.90 fortnightly for Rivera Rentals

1. Based on those figures, total weekly income of $798.48 and total weekly expenses of $322.50 (plus $169.65 rent per week), produces a surplus of $206.33. It is apparent that the figure of $798.48 is the weekly total income, however it is unclear how the expense figure of $322.50 has been reached. On my calculation, the weekly total of the expenses listed is $446.54 not including rent. When rent is included, the total is $616.19: a surplus of $182.29.
2. The application was accompanied by: (1) two illion bank statements for different accounts for the 90-day period to 2 September 2019; (2) a Centrelink statement dated 2 September 2019 (CB 3787-3790); (3) a signed Car Finance 4 You Privacy Disclosure and Consent form; (4) a signed rental agreement dated 19 December 2017 (CB 3740-3745); (5) the contract to purchase the vehicle; and (6) an Equifax credit check dated 2 September 2019 (CB 3791-3793). The Centrelink statement recorded fortnightly deductions from her Centrelink payments of $64.90 for basic household goods (Riviera Rentals), $339.30 for rent, $100 for electricity, $10 for water, and $3.17 for a lump sum advance repayment.
3. The two illion bank statements may be summarised. First there is Bendigo Bank account ending in 6648 (CB 3768): This account bears the nickname 'Statement Account' and had a balance of $98.17 at the date of the statement. The statement records average monthly income of $1,874.23 from Centrelink Family Benefits, $1,187.63 from Centrelink Pension and $422.89 from Centrelink Carers Benefits - an average monthly total of $3,484.75. The statement records debits of $10,752.08 over the statement period, some $343.23 more than the credits to the account of $10,408.85. The account was regularly drawn down close to $0 over the 90-day period, on one occasion being overdrawn.
4. Second, Bendigo Bank account ending in 2134 (CB 3781): This account bears the nickname 'Savings Account' and had a balance of $1,050 at the date of the statement. The only transactions recorded are credits of $50 and $1,000 on consecutive days, described as 'car savings'.
5. On 3 September 2019, the loan application was assigned to Ms Costantini as the credit analyst. Her evidence is that she does not specifically recall assessing the application, which is unsurprising. On 3 September 2019, Ms Costantini ran a further credit check with ARM Consumer Plus for the amount of $11,886 (CB 3843-3844). The credit report listed an outstanding default for utilities, to Panthera Finance in the amount of $806.
6. As explained by Ms Costantini, when a broker uses the API system no application form is generated. The information as to income and expenses is populated into the system by the broker. The recorded weekly income of $798.48 was derived from the fortnightly Centrelink statement amounts for Centrelink Part A, Part B and Parenting payments. The weekly amount for living expenses of $322.50 was derived from the income details submitted directly by the broker. The weekly amount for dependants of $100, being $50 per dependant, was derived from the Product Guide. The weekly rent amount of $169.65 was derived from the 'Deduction Details' entry for housing paid to 'Aboriginal Housing Victoria' on the Centrelink statement. The two weekly 'other expenses' amounts of $32.45 (described as Riviera Rentals) was derived from the 'Deduction Details' entry for basic household goods on the Centrelink statement. The fortnightly 'other expenses' amount of $3.17 was derived from the 'Deduction Details' entry for a lump sum advance repayment on the Centrelink statement.
7. Ms Costantini was not concerned by the fact that the illion transaction data recorded two overdraws: 1 July 2019 of $5.96 (CB 3778) and between 15 and 19 August 2019, an overdraw of four days of up to $31.28 (CB 3774). That is because it did not evidence poor banking conduct amounting to a knockout under the Product Guide. She gave as her reasons that the transaction data does not always correctly record the sequence of transactions, the extent of the overdrawing was minimal, and the transaction data otherwise recorded a running balance that in her view was healthy. She was not challenged on this evidence, and I accept it.
8. The result of the API capacity calculation was a weekly surplus of $206.33 (CB 3851). Ms Costantini then prepared an Excel repayment calculator which resulted in a weekly repayment of $108.98 (or $218.32 fortnightly) including insurance (CB 3852). It records an interest rate of 24.95% over 78 payments in 36 months, and a monthly account fee of $28. It records the total amount to be financed as $11,255, comprising $8,000 principal, $1,600 insurance, $995 application fee and $660 brokerage fee. Ms Costantini explained that it was not the usual practice to complete the data in the calculator under the heading: CAPACITY CALCULATOR, but it was her practice to do so for every loan that she assessed, even though it required her to enter the income and expense data in two places. She was not challenged on this evidence, which I accept.
9. In preparing the Excel calculator the living expenses amount for one applicant is $225 and the cost per dependant is $100, which are the figures in the Product Guide. Ms Costantini made a further adjustment by increasing the general living expense by $350 per month. She explained the adjustment as follows. The living expense amount in the Product Guide is built into the Excel calculator as a standard formula. To account for this, Ms Costantini made an adjustment on the right-hand side of the capacity calculator with the notation: Increased GL monthly $350. She calculated that amount by subtracting from the broker living expense monthly amount of $1,250, the Product Guide amount of $225 (multiplied by 4; i.e $1,250 -($225 x 4) = $350). In her Excel calculation this produced a surplus amount of $189.03, lower than the amount in the APL calculator. Surprisingly however her evidence was then: "credit analysts following the usual practice always used the surplus calculated in APL in their assessment". She did not explain why that was so, and was not directly and distinctly questioned about this evidence in cross-examination. I accept her evidence.
10. On 3 September 2019, Ms Costantini determined to pre-approve the application. The client notes for Consumer 6 record the following entry at 3:05 pm on 3 September 2019:

"BANKING - GOOD RESI - DOH C/PAY DEDUCTION VEDA - 1 UTILITIES DEFAULT EMP - NIL 100% C/LINK INCOME HAPPY TO MOVE FIORWARD WITH FULL LEND BANKING IS GOOD INCREASED GENERAL LIVING PROVIDED BY THE BROKER AND SURPLUS STILL EVIDENT".

1. Ms Costantini generated a pre-approval document (CB 3813). It records the loan amount of $11,255, comprising $8,000 principal; $1,600 insurance; $995 application fee; and $660 brokerage fee. The repayment period is specified as 36 months with repayments to be made fortnightly. The calculated fortnightly repayments are $218.32, or $189.12 without insurance. The pre-approval document was then sent by email to Car Finance 4 You (CB 3848).
2. On 3 September 2019, Car Finance 4 You emailed Money3 attaching a tax invoice from Automotion Used Cars for a vehicle and requested "an Eric (sic) Warranty for 3 years for $1236.00" also be included (CB 3847-3850).
3. On 3 September 2019, a Money3 credit support officer generated and provided to Car Finance 4 You a settlement pack that included an unsigned credit contract and Money3 application form. The loan document is styled 'Secured Loan Contract' and is in the form of an offer to make Consumer 6 a loan on the conditions set out in the loan schedule and on the accompanying terms and conditions, together said to form the 'Loan Agreement'. The Disclosure Date is 3 September 2019 and there is a note that the information in the Schedule "may change before or after the date we first lend money to you (the Settlement Date)". The loan schedule records the amount of credit as $10,891, the interest rate of 24.95% per annum, the total amount of interest to be repaid of $4,627.60, the repayment period of 78 fortnightly repayments each in the amount of $211.68 with a final payment of $227.24, amounting to a total of $16,526.60 over the loan term. There is separate disclosure of the credit fees and charges of $995 for the loan application fee, $28 for the monthly servicing fee in advance of the settlement date and $28 monthly thereafter, together with a list of fees and charges in the event of default or a request for variation. The total fees and charges, assuming the entire loan term, is disclosed at $6,630.60. There is a separately disclosed the amount of $8,000 to be paid to the motor vehicle dealer, $1,236 to the insurer, $995 to Money3 for credit fees and charges and $660 to Car Finance 4 You. The standard reservation to withdraw if settlement does not occur within 14 days of the Disclosure Date is included
4. The contract required Consumer 6 to make various declarations, including that she had "carefully read" the document and each of its terms and conditions, that the information she had provided was accurate and not misleading and that she had not relied on "any promise or representation by anybody when deciding to enter this transaction". Under the heading 'Special Conditions', the loan purpose is stated to be for the purchase of car and additional products.
5. On 4 September 2019, Consumer 6 signed the warranty policy schedule (CB 1617).
6. On 5 September 2019, Consumer 6 electronically signed the settlement pack documents, including the credit contract and Money3 application form (CB 3928-3941). The Money3 application form recorded weekly income of $798.48 and nil expenses aside from the amount of $169.65 for rent and $1,250 for home and utility.
7. On 6 September 2019, Money3 received from Car Finance 4 You the settlement pack signed by Consumer 6. The documents were saved to the APL system on the same day (CB 4054). The settlement pack included the signed credit contract and Money3 application form, a copy of the warranty insurance, a broker checklist, an ID verification, a tax invoice for the vehicle and a Bendigo Bank statement.
8. When Money3 received the signed settlement pack, a settlement officer was assigned. On 6 September 2019, the settlement officer performed the same procedures that Ms Cavar described for the other consumers, which does not require separate findings for this consumer. In the welcome call, Consumer 6 confirmed her personal details including her Centrelink benefit status and that she had three dependants; the purpose of the loan was for the purchase of a car and additional products; the principal amount and term of the loan; and that she was happy to proceed (CB 4053).
9. On 6 September 2019, Money3 settled the loan and disbursed the loan funds to the dealer and warranty provider (CB Tab 596, row 14). Money3 then sent a text message to Consumer 6 which read "As discussed your fortnightly payments of $211.68 will start on 17/09/2019 via direct debit" and emailed her a welcome pack which included a welcome letter and a copy of the signed credit contract (CB 1666-1697)). Money3 also sent the broker a settlement advice.
10. On 18 November 2020, Money3 sent Consumer 6 an offer for her to redraw up to $1,000 on her current loan. On about 23 December 2020, Consumer 6 applied for the $1,000 redraw offer, which Money3 approved.
11. From 24 December 2019, Consumer 6 did not make the required loan repayments on 14 occasions. In 2021, Money3 received correspondence regarding the financial hardship of Consumer 6, including a letter from the FRLC and from the Victorian Aboriginal Legal Service (CB 3981). On 20 December 2021, Money3 and Consumer 6 agreed that Money3 would waive the balance of $9,517.20 owing on the loan, remove the encumbrance on the vehicle, refund Consumer 6 the amount of $2,891 (representing the add-on fees), and not make any adverse listing on her credit file. Consumer 6 paid a total of $8,180.22 under the credit contract.
12. In her affidavit, Consumer 6 undertakes a reconstruction of her financial circumstances for September 2019. The reconstruction was prepared with the assistance of a representative of the Central Coast Region Financial Counselling Service. Her evidence contains retrospective calculations of her Centrelink income and particularised expenses. The result is that her weekly income is $798 and her weekly expenses are $955, producing a weekly deficit of $157. In cross-examination, she had difficulty in explaining particular expense entries or to reconcile the expenses with contemporaneous documents (T 183-185). Further, the basis for the calculation of the reconstructed figures was not exposed, nor what assistance was provided by representatives of the counselling service. The reconstruction is inconsistent with the contemporaneous documents. I find the reconstruction unreliable.

9.2 Issue 1 and Issue 3: ss 128(d) and 130(1)(a) - (c)

1. ASIC submits Money3 contravened the relevant provisions:

(a) "Including" by failing to inquire whether the consumer wanted finance for an application fee and a broker fee in addition to the price of the vehicle;

(b) By failing to obtain a signed and/or completed statement from the consumer that set out her financial situation, including her likely expenses;

(c) In circumstances where the broker-submitted information did not break down the living expenses of $1,250 per month and the illion bank statements indicated average expenses of $1,012.52 per week, by failing to bring its own inquiring mind to make inquiries to reconcile that disparity and better understand the nature of the consumer's expenses and whether they were one-off or ongoing and their likely impact on her ability to comply with the loan;

(d) In circumstances where the bank statements recorded a deposit of $160 on 2 July 2019 with the narration "The Smith Family", inquire as to the circumstances giving rise to this payment and the likely impact on her ability to comply with the loan where she was receiving payments from a charity;

(e) In circumstances where her debits exceeded her credits, her account was overdrawn several times and there were four days on which the balance was negative, inquire as to the reasons and their likely impact on her ability to comply with the contract; and

(f) By failing to verify the expenses used in the APL capacity calculator by considering them against primary documents such as bank statements which would have indicated average expenses of $1,012.52 per week.

1. Money3 submits that when Consumer 6 first spoke with the car dealer and with the broker, the intended vehicle was identified, and the inclusion of warranty insurance was part of that discussion. She spoke for approximately one hour with Jenny Harris from Car Finance 4 You who informed her, amongst other things, that she could take out "optional extended warranty" insurance for a period of three years, which the consumer agreed to. She was informed that the total repayments, including the extended warranty, would be about $107 per week, and to which the consumer agreed that she would "make it work". In cross-examination, she confirmed that her understanding at the time was that including the price of the warranty insurance had the effect of increasing the loan repayments (T 169-170). She agreed that the broker would on her behalf seek finance to purchase the vehicle inclusive of the cost of the warranty insurance.
2. The application fee and the brokerage fee are not separate requirements and objectives for the purpose of s 130. The requirements and objectives of the consumer was to obtain finance for a car inclusive of warranty insurance.
3. Money3 did make reasonable inquiries and took reasonable steps to verify the financial situation of Consumer 6 in that a review was undertaken of her bank account statements which did not evidence poor banking conduct, the expense amounts that were employed in the APL capacity calculator were taken either from the Centrelink statements, from the information provided by the broker or from the Product Guide.
4. The reconstruction of average weekly expenses set out in the affidavit made by Consumer 6 is unreliable in that it was prepared with the assistance of a financial counsellor, the consumer admitted in cross-examination that she found it "difficult to be accurate", and in any event the table was created with the benefit of hindsight. The most reliable contemporaneous record of the living expenses of Consumer 6 at the time is the information that she provided to the broker.
5. The ASIC reconstruction in final submissions of average weekly expenses from the illion bank statements should be rejected because it sits beyond the pleaded case and in any event it is not possible to identify from each debit in the bank statements which expenses formed part of average weekly expenses and which expenses may have, as discretionary items, been forgone in order to meet repayments under the credit contract.
6. ASIC has not established that the steps that it contends that Money3 was required to take would have resulted in it obtaining new information relevant to assessing unsuitability. Even if Money3 had asked the additional questions that ASIC contends should have been asked, it has not been established that information that would have been provided would have changed the assessment - the more likely conclusion is that the expense amounts provided by the consumer to the broker were correct.

1. The assessment commenced when the broker lodged the application at 11:53 am on 3 September 2019. Ms Costantini determined to pre-approve the loan application and generated the pre-approval documentation at 3.05 pm that afternoon. The pre-approval system note includes the notations "banking - good" and "increased general living provided by the broker and surplus still evident": (CB N 596 r 6).
2. The broker responded by email to Ms Costantini at 4.26 pm on 3 September 2019, attached a tax invoice for the purchase of the vehicle and requested the inclusion of the premium for warranty insurance of $1,236. The credit support officer generated the contract and associated documents which were delivered to the broker at 5.07 pm on 3 September 2019, which conformably with ASIC's case, is when the unsuitability assessment concluded.
3. As to submission (a), in a civil penalty proceeding it is distinctly unhelpful for ASIC to allege a contravention framed as "including" a failure to inquire whether Consumer 6 wanted finance for the application fee and the broker fee. No broker application form was lodged. Although Consumer 6, on 2 September 2019, signed a Credit Guide and Quote which document set out the services that the broker would provide to her and included a statement that the fees payable would include the lender application fee and a broker service fee to not exceed a maximum of $1,100 (CB 3905-3906), that document was not uploaded by the broker to the Money3 API system.
4. When Ms Costantini reviewed the documentation and undertook the capacity calculation, she made no inquiry as to whether Consumer 6 required finance for these fees before she determined to pre-approve the loan and to generate the pre-approval form (CB 3813), which included in the amount to be financed an application fee of $995 and brokerage of $660.
5. No other inquiry was made by Ms Costantini about financing these charges before the settlement pack was sent at 5.07 pm on 3 September 2019. I find that Money3 made no inquiry of Consumer 6, before making the unsuitability assessment, whether it was a requirement of her that these fees be included in the amount to be financed.
6. The next issue is whether ASIC has established that a reasonable licensee at the time would have made these inquiries?
7. The Analyst's Guide November 2017 (CB 6081) was "designed to be consistent with the responsible lending practices". In section 3.1, it is stated that "you must make reasonable inquiries in relation to the consumer's requirements and objectives" including: "the amount of credit requested or the maximum amount sought". The Awareness Training Module May 2018 (CB 6223) on page 13 references inquiries about how much credit a consumer may need or the maximum they would like. The Responsible Lending Policy February 2019 (CB 6296) in section 6 references the loan amount as a component of assessing the consumer's requirements by asking questions that are incorporated into the application form. It may reasonably be thought that those statements highlight why an inquiry as to finance should be made when there is no broker application form.
8. However, this is another example of the issue of a pre-approval which clearly set out that the proposed finance included the application fee and the brokerage. Applying my reasons for Consumers 1 and 3, I am not satisfied that ASIC has established that a reasonable licensee would have made inquiries about finance for these fees in circumstances where a broker was acting for the consumer, the pre-approval referenced finance for these charges and no objection was raised.
9. Thus, I reject submission (a).
10. As to submission (b), I am not satisfied that ASIC has established that where a broker directly uploaded documents to the Money3 API system, that a reasonable licensee would have also required a signed and/or completed statement from the consumer that set out her financial situation, including her weekly expenses. The broker populated the information in the system for the income and expenses of Consumer 6, and in support provided the Centrelink statements (CB 3787) and the illion bank statements (CB 3768). ASIC has not established that a reasonable licensee would have also required the broker to provide a signed and/or completed application form from the consumer in such circumstances.
11. Submissions (c) and (f) are related and may be dealt with together. Ms Costantini's evidence is that the monthly living expense amount of $1,250 equated to a weekly amount higher than the Product Guide of $225 per week, and the Product Guide amount was automatically populated into the API system. To compensate, she increased the general living expense in the Excel calculator by $350. By this method, she calculated total weekly expenses of $609.45 resulting in a weekly surplus of $189.03 (CB 3852). To that extent, Ms Costantini did bring an inquiring mind to the expenses question.
12. ASIC takes the submission further and retrospectively calculates total debits from the illion bank statement between 4 June and 2 September 2019 in the sum of $9,692.08, excluding transfers to her separate account, and then derives an average weekly spend of $753.83 to which it then adds a weekly amount of $258.69 being deductions from the Centrelink statements to produce the amount of $1,012.52 per week. Money3 is criticised for not "breaking down" the declared figure of $1,250 per month in order to reconcile the disparity with the recalculated amount of $1,012.52 per week.
13. How that calculation was undertaken needs to be understood. The total of credits in the transaction data is $10,408.85 and the total debits is $10,752.08. It does not follow that Consumer 6 spent more than she earned in the period as two debits totalling $1,050 were transfers to her savings account for the purpose of funding a vehicle purchase (26 August $50 and 27 August $1000: CB 3773. Thus, her expenditure was $9,702.08, less than her income by a margin of $706.77.
14. There are several difficulties with the ASIC submission. Like each other case, it steps outside of how ASIC pleads and particularises this contention. In the particulars of 31 July 2023, ASIC calculated weekly income of $798, and expenses of $697.50 as the greater of HEM or disclosed HEM comparable expenses plus non-HEM comparable expenses of $257.52, in total $955. That resulted in a weekly deficit of $157.
15. Another difficulty with the submission is that if the retrospective recalculation of average weekly expenses of $1,012.52 per week is correct, then Consumer 6 was spending an average weekly amount far greater than her Centrelink income of $798.48. If that were so, one would expect to see in the illion bank statements that the account was regularly overdrawn. There is next to no evidence of that occurring (save for on five occasions, addressed below). There is no evidence of any other income, apart from an annual maintenance payment of $868.64.
16. That does not conclude the difficulties. On 27 August 2019, Consumer 6 withdrew $1,000 recorded as "Car savings" (CB 3773). Her evidence was that she approached Bendigo Bank to inquire about a car loan, and was rejected because she was a Centrelink recipient. In August 2019 she "decided to do what the person at the bank told me" and commenced saving to purchase a car. By the end of August 2019, she transferred $1,050 from her transaction account into her savings account for that purpose. Her evidence was also that she told the broker that she had a surplus of about $250 each fortnight "after I pay for everything" (CB 1387 [36]). Although the ASIC recalculation excludes the transfers, it fails to grapple with what she told the broker which was part of her evidence-in-chief. It also fails to explain how Consumer 6 could have truthfully declared in writing to the broker on 5 September 2019, that her monthly general living expenses were $1,250 (CB 3908-3911) when according to ASIC it was more like $4,000.
17. The final difficulty is that the tax invoice for the vehicle purchased (CB 3850) records that Consumer 6 paid a deposit of $2,402.30. Her evidence-in-chief was that she negotiated the purchase price of the car from $11,000, down to $10,000 and then: "so, after the deposit, I needed a loan of about $8000". The ASIC submission fails to explain how she could have saved for a car deposit of approximately $2,000 if, according to the retrospective recalculation, her average weekly expenses exceeded her weekly income by approximately $214.
18. I therefore reject submission (c).
19. Dealing next with submission (f), apart from making the living expenses adjustment to the general living expenses to align with the declared amount, Ms Costantini did not say that she made any other inquiry into the living expenses of Consumer 6. Nor did she say that she undertook any verification step in relation to the declared living expenses.
20. It will be recalled that in addressing the Consumer 1 claims, I set out the extent of the cross-examination of Ms Costantini relevant to the consideration by the credit analysts of the bank transaction data on the inquiry into and verification of expenses issues. I also set out the extent to which Ms Costantini was questioned about what she did for Consumer 6. Her evidence went no further than a reference to the pre-approval note ("banking good"), and that she "conducted an overall view of the banking conduct and the expenditure and the liabilities and income that is going into the bank", which evidence she did not include in her affidavit. Nor did she explain just what she did if that review had been undertaken by her of the bank transaction data for Consumer 6. She was not re-examined on this evidence. I reject this aspect of her evidence. Ms Costantini's affidavit extends to 63 pages and 261 paragraphs. It contains detailed evidence of what steps were taken for each of the consumers in issue. Her evidence plainly addressed a central issue in the case: the contention that Money3 failed to make reasonable inquiries and take reasonable verification steps conformably with the obligations at s 130. It is implausible that if more detailed inquiries have been made by her of the bank transaction data and that if she had taken specific steps to verify the declared expenses of the consumer, that this evidence would have been omitted from her affidavit.
21. If Ms Costantini had considered the bank transaction data, she would have noticed an obvious a pattern of weekly expenditure substantially greater than the amount uploaded by the broker to the API system of $1,250 per month. As examples, in the seven day period between 26 August and 1 September 2019, excluding rent and transfers to the car savings account, the expenses were approximately $485 and for the period 12 to 18 August 2019, the expenses were approximately $540 (CB 3773-3774). The declared amount in the API did not distinguish between reasonably necessary expenses, minimum necessary expenses or some other subcategory. The $1,250 amount was simply entered as home and utilities and general living expenses.
22. Hence, considering all of Ms Costantini's evidence when read with the business records, I find that no inquiry was undertaken by Ms Costantini into the bank account transaction data save for her determination that it did not evidence poor banking conduct. Correspondingly, she did not take any step to verify the declared general living expenses with reference to the bank account data.
23. The next issue is whether ASIC has established that a reasonable licensee in the position of Money3 at the time would have inquired into the bank account data and would have used it as a verification tool to be satisfied about the quantum of the declared general living expenses of Consumer 6? I am satisfied that it has, adopting my analysis and findings mutatis mutandis for Consumer 1.
24. Accordingly, submission (f) is made out, though not to the extent of a finding that Money3 should have averaged the debits over the entire period and then added the Centrelink debits to derive a weekly average expense of $1,012.52.
25. As to submission (d), the transaction data discloses a direct credit from the Smith Family of $160 on 2 July 2019. It is not a recurring payment. Ms Costantini does not address this credit in her affidavit, nor was she questioned about it in cross-examination. Accepting that she did not undertake any separate inquiry about it, I am not satisfied that ASIC has established that a reasonable licensee in the position of Money3 at the time would have given any separate consideration to this one-off payment. ASIC has not explained why an inquiry as to the circumstances which led to this payment, or as to the likely impact on the ability of the consumer to meet her loan commitments, would have been material to the overall consideration of the requirements and objectives and financial situation of Consumer 6. In the context of the income and expenses in the 90-day period, this payment was inconsequential.
26. Submission (e) is not made out. Within the 90 days of transaction data, the account was overdrawn to a maximum amount of $31.28 on 16 August 2019. It was overdrawn on five occasions between 15 and 19 August 2019. I accept the evidence of Ms Costantini in that the illion transaction data did not always accurately record the timing of transactions and in any event, the overdrawing was minimal and therefore not material. Further, it is not correct that there was a general pattern of debits exceeding credits and on many occasions within the 90-day period the balance exceeded $200.

1. ASIC has established a contravention of ss 128(d) and 130(1) (a)-(c) in that Money 3 failed to:

(a) Make reasonable inquiries about the declared living expenses of Consumer 6 by examination of her bank account transaction data; and

(b) Take reasonable steps to verify her declared living expenses by reference to her bank account transaction data.

1. ASIC submits that in purporting to undertake the unsuitability assessment by deriving a weekly surplus of $206.33, Money3 relied on the declared expenses of Consumer 6 which were greater than the arbitrary expense amounts in the Product Guide, but was substantially lower than her reasonably necessary expenses, which, as I have explained, ASIC recalculates in the amount of $1,012.52.

1. I reject the submission. For the reasons that I have given for Consumer 1, ASIC has not established that the Product Guide minimum figures were arbitrary and, for this consumer, ASIC has not established the recalculated reasonably necessary weekly expense. Further, Ms Costantini recalculated weekly expenses at $439.80 excluding rent (CB 3852), which exceeds the declared general living expense (excluding rent) when converted to a weekly amount of $312.50. which cannot be described as the result of the application of arbitrary amounts from the Product Guide.

(a) If Money3 had made reasonable inquiries and verification of the financial situation of Consumer 6, then it would have known that her reasonably necessary expenses were $1,012.52, which exceeded her weekly income of $798.48 with the consequence that she could not afford the loan repayments of $105.84 per week;

(b) The bank transaction data records a payment from the Smith family of $160 on 2 July 2019, that her debits exceeded her credits and that her account was overdrawn several times;

(c) The Centrelink statements data further records deductions totalling $517.37 fortnightly or $258.69 weekly for Riviera Rentals, Aboriginal Housing Victoria, Red Energy and lump-sum advance repayment and East Gippsland Water;

(d) Therefore the consumer was "in a very precarious financial position at the time of the assessment and at the time of entering into the credit contract"; and

(e) Money3 has not introduced any evidence which suggests that the consumer could have increased her income or reduced her expenses and she was not challenged in cross-examination about her capacity to do either.

1. I reject submissions (a) and (b) for the reasons that I have given in resolving Issues 1 and 3. Submission (c) is factually correct, but fails to understand that the capacity calculation that Ms Costantini undertook included the amounts paid to Riviera Rentals of $32.45 per fortnight and the amount of $169.65 paid to Aboriginal Housing Victoria, which was separately assessed as rent. That leaves the utility amount of $50 per week paid to Red Energy (CB 3788-3799), which Ms Costantini did not separately account for. However, what it leads to is the support that it provides for the conclusion that the weekly expenses of the consumer exceeded her income and which is dependent on accepting that her average weekly expenses were $1,012.52, which I have rejected. It further follows that ASIC has not established that Consumer 6 was in a "very precarious" financial position at the time of the assessment and submission (d) fails. Finally, as to submission (e), Money3 does not carry any onus of proof in this proceeding, and it fails for that reason alone.
2. Accordingly, these contraventions are not established.

1. These issues may be considered together. The ASIC closing submissions identify 17 contraventions based on multiple findings of fact.

1. The case pleaded in the Concise Statement is:
   1. During the relevant period, Money3:

a) failed to provide or arrange adequate training, professional development or other instructional assistance; > > b) failed to provide adequate templates, forms, checklists and guides; and > > c) failed to assess the skill and competency of its representatives, to ensure that its representatives were adequately trained, and were competent, in discharging Money 3's obligations under sections 128, 130, 131 and 133 of the Act, in contravention of sections 47(1)(g) and (4) of the Act, and in particular, Money3: > > d) failed to provide its representatives with adequate training and tools to ensure that its representatives were competent to make reasonable inquiries about consumers' requirements, objectives and financial situation and to take reasonable steps to verify consumers' financial situation; > > e) directed its representatives to apply the minimum expense amounts contained in the Product Guide rather than adequately carrying-out the steps referred to above; and > > f) failed to provide its representatives with adequate training and tools to ensure that its representatives were able to competently carry out assessments as to the unsuitability of credit contracts.

2. As a result of the matters referred to in paragraphs 5 to 41 above, Money3 did not take reasonable steps to ensure that its representatives complied with sections 128, 130, 131 and 133 of the Act, in contravention of section 47(1)(e) and (4) of the Act, and failed to ensure that its representatives were adequately trained, and were competent, to engage in the credit activities authorised by Money3's licence, in contravention of section 47(1)(g) and (4) of the Act.
3. The particularised case is somewhat more detailed. Initially, in particulars provided by letter dated 24 October 2024, ASIC contended that the s 47 case is not confined to the dealings by Money3 with the six consumers in issue and is disclosed in the annexures to an affidavit made by Ms Berry on 30 November 2023 and the Expert Report of Mr Hartman. Nonetheless, ASIC invited Money3 to request further and better particulars of the case.
4. Such request was made on 15 November 2024 and responded to on 5 December 2024. The response comprises four pages. ASIC emphatically stated that the s 47 case is not limited to the broker submitted applications for Micro Motor loans in issue. The particulars then provide in part:

The evidence ASIC relies on in relation to training and supervision by Money3 of its representatives during the relevant period is comprised in the exhibits to the affidavit of Ms Berry and the Expert Report of Mr Harman.

Reliance on the Product Guide

Although there are other facts which establish the contraventions of s 47 set out in paragraphs 41 and 42 of the Concise Statement, a critical aspect of the s 47 case is the use of and reliance on the living expense figures contained in the Product Guide when assessing applications for Micro Motor loans to inform:

1. the steps Money3 took to purportedly ensure its representatives complied with the credit legislation; and

2. the content of the training Money3 provided to purportedly ensure its representatives were adequately trained, and were competent to engage in credit activities authorised by Money3,

and which resulted in ss 47(1)(e) and (g) being contravened because the living expense figures contained in the Product Guide were: (a) not a reasonable approximation/benchmark of the consumer's reasonably necessary expenses; and/or (b) too low and demonstrably unrealistic, for assessing whether a consumer would be able to comply with a credit contract.

Section 47(1)(g)

In addition, Money3 failed to ensure its representatives were adequately trained, and were competent, to engage in discharging the obligations under ss 128, 130, 131 and 133 because:

the training materials contained generic content that lacked adequate explanation of how staff are expected to apply the obligations to their dayto-day activities, were not updated to reflect relevant case law or updates to RG209, and did not include specific training for those responsible for governance;

whilst records of training were maintained, staff did not complete retraining regularly or in response to issues identified from complaints and breach reporting; and

the training materials found to include instruction on how, within the practices of Money3, its obligations were to be complied with.

Money3 directed its representatives to apply the minimum living expense figures contained in the Product Guide and the training provided to staff was to use the higher of declared or minimum living expenses from the Product Guide.

Reliance on the minimum living expense figures contained in the Product Guide resulted in a failure to properly consider the minimum necessary expenses of the consumer.

Section 47(1)(e)

Money3 did not take reasonable steps to ensure that its representatives complied with ss 128, 130, 131 133 because:

the policy and procedure documents were drafted and approved of by business managers, and not by the risk and compliance function:

the policy procedure documents were inconsistent, were missing practical guidance to staff, and were not formally reviewed and updated at regular intervals;

the systems and processes were missing information, elements and controls to ensure that required information was gathered;

the Credit Analyst Guide was out of date, it did not address obligations to verify information gathered, and encouraged staff to override policy;

the ability to monitor compliance was compromised by the overwriting of data and the use of text fields;

there was limited compliance reporting outside of the complaints and breach reporting and Money3 had no compliance reporting to front-line staff, who were instead provided with leaderboards in relation to loan approvals; and

those in governance roles did not receive appropriate training, identify risk and compliance issues on ensure corrective action was taken.

1. The primary source of these contentions is the Expert Report of Mr Hartman. ASIC requested his opinions in answer to two questions (numbered 3 and 4) framed by the reasonable steps a licensee in the position of Money3 should have taken during the relevant period to: (3) ensure compliance by its representatives with the credit legislation and whether Money3 did in fact take such steps; and (4) to ensure that its representatives were adequately trained and competent to engage in the credit activities authorised by the licence and whether Money3 did in fact take such steps.
2. There is an initial difficulty with the questions. The issue is what a reasonable licensee would, not should, have done in the circumstances. Further, Mr Hartman was tasked with expressing his opinion on the ultimate issue of fact. These are not, however, reasons to cast aside his evidence.
3. Mr Hartman's opinions in answer commence at Part 31 of the Expert Report. Dealing first with question 3, the analysis commences at [779] and concludes at [922]. It begins with his defined execution framework and each of its sub elements: accountability, policy, process, procedure, training, monitoring, reporting and governance. these are contended to be the minimum expectations of reasonable and prudent lenders. An example of his granular analysis is [785] where he addresses the minimum expectation being the practice of reasonable and prudent lenders as follows (CB 2001):

It is common practice of Reasonable and Prudent lenders in their development and maintenance of documents that the various policy and operational settings are supported by analysis.

These artefacts, which are regularly maintained show in particular, deliberate decision is taken to ensure policies are set and adjusted as required so as to be appropriate for the nature of the applicants that the product if (sic) offers attract.

1. Having set that minimum expectation his corresponding analysis in part provides (CB 2001-2002):

I found no evidence of robust analysis and sound reasoning by Money3 to support key policy settings, such as any objective justification for... expense benchmark values such as... Money3's GLE benchmark values.

I found anecdotal policy setting (i.e., statements/assertions without objective evidence and reasoning) and records showing that formal governance over policy setting was not timely with multiple instances of policy approval taking more than 10 months.

...

These aspects are not consistent with the practices of Reasonable and Prudent lenders.

Further, I found no evidence of portfolio level analyses feeding into any governance activities in relation to policy approval i.e. no analysis based justification for the approval was found.

...

Not having an Execution Framework that is adequately "tuned" to such a population i.e., that addresses both the income and outgoings appropriately is inconsistent with the practice of Reasonable and Prudent lenders.

1. Mr Hartman does not expose the practices of reasonable and prudent lenders that he refers to. He does not identify a practice of a reasonably prudent lender at the time. No lender is identified by name as having implemented the practice that he contends was the minimum expectation. He fails to expose his reasoning as to why the practices of Money3 fell short of the unidentified practices of reasonable and prudent lenders. Rather, Mr Hartman's opinions proceed on the basis that this Court must accept his assertion about the common practices of reasonable and prudent lenders, together with their content.
2. For the reasons I have given in Part 4, Mr Hartman's failure to expose his reasoning process makes it impossible for me to undertake an assessment of the basis on which he has expressed those opinions, and their ultimate value in assisting me in the making of relevant findings of fact.
3. This example of Mr Hartman's failure to expose his reasoning process infects the entirety of his opinions in answer to question 3 where he addresses the execution framework [786] - [807], accountability [808] - [817], policy [818] - [835], process [836] - [849], procedures [850] - [875], training (which is cross-referenced to section 42) [876], monitoring [877] - [896], reporting and analysis [897] - [912] and governance [913] - [922]. The failures are material and so repetitive that I am not able to make findings of fact in accordance with any of Mr Hartman's opinions as to these matters.
4. Regrettably, the same failure infects Mr Hartman's opinions in answer to question 4 from [923] to [953] (CB 2059-2066). Within these paragraphs Mr Hartman contends that effective training requires four primary elements: content, logistics, assessment and integration which in each case he contends is the minimum expectation being the practices of reasonable and prudent lenders. As an example, when addressing the content primary element at [935], Mr Hartman commences with a statement of what "is necessary to ensure effective training" which is the standard by which he then analyses the training material of Money3. The first step in his analysis is in part:

Content:

The breadth of what needs to be developed and documented in training materials must cover the full scope of what is required to be done including operational, assurance and oversight activities.

There is a logical sequence required to ensure that the content of Training materials is appropriate. What elements are prerequisites depends on what is driving the change. The following are the sequence of items that must be developed (and approved) PRIOR to finalising training materials so that training can reflect what is expected to happen:

1. Policy - to the extent that the updating practice relates to a policy change - the new policy must be drafted and approved first.

2. Process - to the extent that the update in practice related to a new capability to undertake the activity - the new capability needs to be designed, develop (sic), and tested first.

3. Procedure - to the extent that the updating practice relates to a new way of executing an activity - the new approach must be documented and tested first.

Training materials, whilst reflecting policy and procedure needs to be different. To be effective training materials need to provide more than instruction regarding what is required and how to deliver it.

...

1. Once again Mr Hartman fails to expose any practice of a reasonable and prudent lender during the relevant period which he contends amounted to a minimum expectation to support each of his contentions. And he employs mandatory language, such as "must cover" where the statutory obligations in issue are limited to the taking of reasonable steps to ensure that representatives comply with the credit legislation and to ensure that representatives are adequately trained and competent to engage in the credit activities authorised by the licence.
2. I am unable to make findings of fact in accordance with those opinions. That does not mean that aspects of the Expert Report that are not dependent on the practices and procedures of lenders at the time must also be put aside. In that more limited way, it is considered where relevant to this part of the case.
3. For completeness it should also be recalled that the Expert Report is dated 19 December 2023. Ms Costantini made her affidavit on 10 May 2024. She provides extensive evidence-in-chief as to the training provided for new credit analysts at [13] - [18], employee training at [19] - [22], meetings with team leaders at [23] - [26], audits at [27], analyst meetings at [28], boardroom meetings at [29], team huddles at [30] - [32] and the development and implementation of the Product Guides in issue at [54] - [62]. Mr Hartman was not requested by ASIC to review that evidence to determine whether it alters his opinions or to provide a supplementary expert opinion in response.
4. Ms Cavar made her affidavit on 9 May 2024. She addresses the training, oversight and procedures relevant to the settlement team at [9] - [25]. Her affidavit was not provided to Mr Hartman for review.

1. Unhelpfully, ASIC's written submissions replicate or summarise various contentions from the particulars of the case. Money3 complains that several ASIC submissions in support of the s 47(1)(g) case stray beyond the pleaded case as they seek to introduce matters referred to in support of the s 47(1)(e) case. The complaint is unfounded. The particulars are not so rigidly structured and there is considerable overlap between the statutory obligations in subparagraphs (e) and (g).
2. At this point it is necessary to resolve the difference between the parties in their formulation of the wording of Issues 6 and 7. The first difference is that Money3 confines each to its dealings with, and the credit contracts for, the six consumers in issue. As I have noted, in particulars ASIC expressly did not so confine its case. I reject the Money3 formulation to that extent. It follows that Issue 7 is as formulated by ASIC.
3. The second difference is the inclusive list at items 6.1, 6.2 and 6.3 of how ASIC formulates Issue 6. Each of these subparagraphs replicate the pleading at paragraph [41] of the Concise Statement. However, the particulars of 5 December 2024, in addressing the s 47(1)(g) case identify as the "critical aspect" the use of and reliance upon the living expense figures contained in the Product Guides and then by way of "other particulars" there is a list of asserted deficiencies in training materials and the maintenance of records. There is no reference to professional development, instructional assistance, templates, forms, checklists or to the assessment of the skill and competency of its representatives. Money3 makes the valid complaint that the ASIC case is unclear. In a civil penalty proceeding the obligation that ASIC must assume is to give adequate and fair notice of the case that must be met. The inclusive list at 6.1, 6.2 and 6.3 was not highlighted in the particulars, which unhelpfully references "other facts" which are said to establish the contraventions without identifying those facts. Nonetheless, I do not consider that by proceeding in this way ASIC must be taken to have abandoned the broader pleading at [41] of the Concise Statement.
4. Still, that is not the end of the matter. The written closing submissions of ASIC require careful attention to determine what is the case as finally formulated. As to 6.1, there are multiple submissions to the effect that Money3 failed to provide adequate training to its representatives. This is a prominent feature of the case at [94.2], [94.3] and [94.5]. There is no relevant reference to professional development. There is one reference a failure to include instructions to representatives as to how the statutory obligations were to be complied with: [94.4]. Thus, ASIC must be taken to have abandoned the professional development contention as a discrete issue, though it is an aspect of the broader adequate training contention.
5. As to 6.2 there is no relevant reference to adequate templates or forms. There is explicit reference to inadequate checklists and multiple contentions about the inadequacy of the Product Guides. Indeed, as noted the particulars of 5 December 2024 identify the living expenses in the Product Guides as a critical aspect of the case. But, ASIC must be taken to have abandoned the template and forms contentions.
6. As to 6.3, there is no reference to a failure to assess the skill of representatives. As to competence, there are multiple references, though in the context of directing representatives to apply Product Guide expense amounts ([8.1]), and as part of a general submission at [95] that Money3 failed to undertake a continuing training program designed to produce competent representatives.
7. Accordingly, Issue 6 becomes:

Whether Money3's representatives were adequately trained, and were competent, to engage in the credit activities authorised by the credit licence, as required by s 47(1)(g) of the [Act], including whether Money3:

6.1 provided or arranged adequate training or other instructional assistance to its representatives;

6.2 provided adequate checklists and guides to its representatives; and

6.3 assessed the competency of its representatives.

1. Having cleared that ground, there is a further issue to address: Is it part of the ASIC case that Money3 failed to take reasonable steps to assess whether its representatives understood and then applied the training that was provided? Or put another way, failed to take reasonable steps to ensure that the training provided was effective. I have found that Money3 contravened the obligations at ss 128(d) and 130(1)(b) and (c) for the five credit contracts in issue for the six consumers. There were four representatives of Money3, Mr McAuley, Mr Marchesin, Mr Ondem and Ms Costantini, each of whom failed to make reasonable inquiries and to take reasonable verification steps of the financial situation of each of the six consumers by considering the bank transaction data as a method of inquiry and verification of declared living expenses. On one view, that may evidence a failure by Money3 to ensure that its representatives were adequately trained or to take reasonable steps to ensure they complied with the Act. Nonetheless, the more fundamental issue is whether ASIC pleaded and particularised that case and now presses it in closing submissions?
2. That case is within the general pleas at [41](a) and (c) of the Concise Statement - a failure to provide adequate training and to assess skill and competency. However, neither claim is particularised beyond a reference to documents annexed to the affidavit of Ms Berry of 30 November 2023 and Mr Harman's Expert Report. Ms Berry's affidavit references documents obtained from Money 3 during the investigation, which does not take the particularisation any further. As explained, Mr Hartman's Expert Report cannot be the basis for particularising this aspect of the case.
3. To the extent that it forms part of the closing submissions, there are generalised references to the general conduct obligations at [91] - [99] which commences by replicating the contentions in the Concise Statement at [41]. Beyond that, at [94] the submission is that ASIC identified the case in correspondence dated 5 December 2024 (set out above). It will be noticed that the case framed relevant to living expenses is confined to reliance on the Product Guide amounts which is said to be the step that Money3 took "to purportedly ensure its representatives" complied with the Act and to "purportedly ensure its representatives were adequately trained, and were competent", each because the living expense figures were not reasonable, were too low and or "demonstrably unrealistic". As I have explained in detail, that case has not been established.
4. That does not conclude how ASIC particularises the s 47(1)(g) case. There is a further contention that reliance on the living expense amounts in the Product Guides "resulted in a failure" to properly consider the "minimum necessary expenses" of each consumer. I have also explained in detail why that case has not been made out: Money3 did not require or receive a breakdown of living expenses to that level of detail.
5. It was open, for example, to ASIC to contend for a less complex case to the effect that the training material in the form of the November 2017 Analyst's Guide, in particular the reference in Part 9 to the bank statements as "crucial" in the assessment of an application, was not adequate or effective to comply with s 47(1)(g) because employees did not undertake the assessments in that way, but that is not how the case was framed. Similarly, the case may have been framed by reference to the May 2018 National Consumer Protection Awareness PowerPoint presentation or the May 2020 Credit Policy. Instead, ASIC made the forensic decision to focus on the Product Guide expense amounts, and the instruction to use the amounts therein where greater than consumer declared living expenses, instead of the anterior assessment and verification failures by reference to the bank statement data that have been established.
6. Returning to ASIC's closing submissions, the reference to a failure to undertake a continuing training program that was designed to produce competent representatives or maintain their level of competence at [95], is a conclusion that flows from acceptance of the separate contraventions at [94]. There is no reference in [94] to a failure to ensure that the training that was provided was understood and applied by representatives, or was effective. There is a reference to Money3 being inhibited in its ability to monitor compliance, but that submission is confined to compromise by reason of the overwriting of data. ASIC's reply submission takes the case no further in that it primarily relies on multiple references in Mr Hartman's Expert Report.
7. As I have stated, in a civil penalty proceeding it is important that the contravention alleged is clearly expressed and identified in the evidence to be relied on. Having found that the evidence of Mr Hartman cannot be relied on as a basis to find relevant facts relating to the practices and procedures of reasonable lenders at the time, the door is closed to an excursion through the Expert Report to determine whether there is evidence of ineffective training of Mr McAuley, Mr Marchesin, Mr Ondem or Ms Costantini by reference to such standards.
8. For these reasons, I conclude that this is not part of the ASIC case.
9. Now, the practical approach to the ASIC case is to draw the submissions into the following groups. Doing so reduces the multiple contended contraventions to a manageable scale. Section 47(1)(g) (Issue 6) is concerned with adequate training and competence of representatives. ASIC contends that Money3 breached this obligation in that:

(a) It trained its representatives to use or rely on the living expense figures contained in the Product Guides when those figures were not a reasonable approximation or benchmark of a consumer's necessary expenses and were too low and demonstrably unrealistic for the purposes of assessing whether a consumer could comply with a credit contract. The Product Guide figures which were built into the APL capacity calculator, resulted in a failure to properly consider the minimum necessary expenses of the consumer in assessing whether they would be able to comply with a credit contract;

(b) It provided training materials that contained generic content and which lacked an adequate explanation of how staff were expected to apply the statutory obligations to their day-to-day activities, were not updated to reflect relevant case law or ASIC regulatory guidance and did not include specific training for those responsible for governance;

(c) Staff did not complete retraining regularly or in response to identified complaints and breach reporting;

(d) The training materials failed to include instruction on how the obligations of Money3 were to be complied with;

(e) Those in governance roles did not receive appropriate training, identify risk and compliance issues or ensure that corrective action was taken; and

(f) It failed to maintain a continuing training program that was designed to produce competent representatives and maintain their level of competence.

1. Section 47(1)(e) (Issue 7) is concerned with taking reasonable steps to ensure that representatives comply with the Act. ASIC contends that Money3 breached this obligation in that:

(a) The policy and procedure documents were inconsistent, were missing practical guidance to staff and were not formally reviewed and updated at regular intervals;

(b) Systems and processes were missing information, elements and controls to ensure that required information was gathered;

(c) The Credit Analyst's Guide did not address obligations to verify information gathered and encourage staff to override policy;

(d) The ability to monitor compliance with the Act was compromised by the overwriting of data and the use of text fields;

(e) It had limited compliance reporting, outside of its complaints and breach reporting, and had no compliance reporting to front-line staff; and

(f) It failed to take steps to properly monitor and supervise its representatives to ensure compliance concerns were escalated and to take action that was commensurate with the risk presented by such concerns.

1. In support of those contentions, ASIC submits that 26 findings of fact should be made as relevant to the inadequacy of the Product Guides and 55 findings of fact should be made as relevant to the inadequacy of the training, policies, practices and procedures of Money3. A considerable number of those findings turn on acceptance of the evidence of Mr Hartman.
2. Money3 submits that the evidence clearly establishes that it had in place processes to adequately train its staff to apply the statutory obligations to their specific activities, including one-on-one training and informal training. The training materials were updated. ASIC has not identified the specific training that it contends should have been included for management and executives and why the statutory obligation was not met without such training.
3. Money3 did implement regular training. ASIC has failed to identify any failure with respect to the responses of Money3 to complaints and breach reporting. The reasonable steps obligation to ensure compliance by its representatives did not require Money3 to have in place the prescriptive requirements that ASIC relies upon. No inconsistency in policies and procedures has been identified. ASIC has not identified the information, elements or controls that it contends were absent. The Credit Analyst's Guide was not out of date, and ASIC has failed to identify the obligations it contends were missing or required. ASIC has not established that the Money3 software and systems were inadequate to ensure that reasonable steps were implemented to ensure compliance. It has not established any allegation of the lack of compliance reporting. Nor has it established any steps that ought to have been taken to escalate concerns or complaints with particularity.
4. Whether a contravention is established and whether it is the result of a lack of adequate training or a failure to take reasonable steps to ensure compliance is circumstance specific. In context, the alleged breaches relate to five contracts entered into over an extended period, which does not evidence deficiency in the policies, practices, procedures and training programs that Money3 had in place.
5. Like ASIC, Money3 contends that that a large number (50) of separate findings of fact should be made in its favour in support of its contentions.

1. Once the evidence of Mr Hartman concerning prescription of the minimum necessary practices, procedures and training requirements of reasonable and prudent lenders is put to one side, the ASIC case rests on what was put in place by Money3 during the relevant period, as set out in its internal business records and the evidence contained in the statutory responses and examinations, when considered with evidence adduced in cross-examination.
2. There is a vast quantity of this material. All of the documents are self-explanatory as to what Money3 did. What is in issue though is whether what it did without the benefit of hindsight analysis amounted to reasonable steps to ensure its representatives complied with the Act and whether it ensured they were adequately trained and were competent to engage in the credit activities authorised by the licence. In these respects, ASIC's submissions are very detailed in analysing why the content of particular documents and the procedures and policies of Money3 fell short of the statutory standards.
3. In contrast, Money3 relies not only on its contemporaneous documents but also on the positive evidence of Ms Costantini and Ms Cavar. I first address their evidence as it cuts through the density of the documents.
4. In evidence-in-chief Ms Costantini commenced with the training provided to new credit analysts. An individual in the Micro Motor Department would commence training with credit support officers for a period of approximately two or three days. The person would sit next to an experienced officer who would teach them how to perform their role. This included the data that was required to be entered into the APL system and how to conduct employment and rental checks and to generate documents. The new credit analyst would be provided with a copy of the Product Guide. Having successfully completed that initial training, the new credit analyst would be trained in how to process loan applications. They would be assigned to an experienced credit analyst and would learn by observation. The new credit analyst would then assume the assessment process, observed by the more experienced officer. Once the experienced officer was satisfied that the new credit analyst could undertake each of the necessary steps, the new employee would move to the assigned Micro Motor team. Commonly, this would occur approximately two weeks following the commencement of training.
5. The new credit analyst would then commence assessing applications on their own. They would be supervised by a team leader. Before communicating an assessment decision, the results of the assessment would be provided to the team leader for review. The decision would not be communicated until the team leader had approved of the assessment. This process would continue for approximately one month until the team leader was satisfied that the new employee was capable of making the assessments. Once that point had been reached, the new employee would receive delegated authority to assess loans of no more than $5,000, without approval from a team leader. Once the new employee demonstrated proficiency in assessing loans to that amount, their authority would be increased to $8,000. Commonly this process could take up to two months.
6. New and current employees in the Micro Motor Department were required to complete training modules and read and acknowledge some of the Money3 policy documents. Retraining was required on an approximately annual basis, normally after the closure of each financial year. The training was conducted through a platform known as ELMO.
7. Ms Costantini refers to documents, in the form of an Excel spreadsheet record of training provided to employees and which records her attendance at three training courses between 20 July 2018 and 14 August 2019, respectively: National Consumer Credit Protection Act Awareness, National Consumer Credit Code Awareness and Responsible Lending. Although she does not now recall the content of each training module, having referenced each of the documents referred to, her evidence is that the content of each is consistent with her recollection of the training that she received.
8. The National Consumer Credit Protection Act Awareness module (CB 6223) comprises 21 pages. At a high level and in simple terms and language it addresses the key terms of the Act, the types of credit that it applies to, the licensing requirement and the licensee obligations, the credit representative obligations, the serious consequences of contravention of the statutory scheme, the essential steps to achieve the objective of responsible lending, the requirements to make reasonable inquiries of the financial situation and requirements and objectives of the consumer, the verification requirement, how to undertake a suitability assessment and the credit proposal disclosure obligations.
9. The National Consumer Credit Code Awareness module (CB 7011) is similar in form and content to the previous module in its description of the scope and application of the Act and the consequences of contravention. It differs in that it also includes information about the giving of guarantees, insurance, alterations to a contract, mortgage or guarantee, hardship variations, defaults and enforcement, statements of accounts and disputes and the mechanism for ending a contract.
10. The Responsible Lending training module (CB 6321) addresses the obligation of responsible lenders, references the ASIC Regulatory Guide 209 - Credit Licensing: Responsible Lending Conduct (RG 209) (and provides an electronic link to it), sets out the steps required to undertake a credit assessment by making reasonable inquiries and reasonable verification steps in order to establish whether the contract will not be unsuitable, how to assess a consumer's requirements and objectives, how to assess the consumer's financial situation by reference to income, fixed and variable expenses, credit history and circumstances, the verification step for income and expenses (including the use of 90-day bank statements to verify expenses), factors relevant to the scalability of the reasonable inquiries and verification steps, how to undertake the suitability assessment and the obligation to keep records and written assessments.
11. Returning to the evidence of Ms Costantini, she next addresses meetings between credit analysts and team leaders which were held every month, or every second month, as well as on an ad hoc basis, if there was an issue that required more timely attention. The topics of discussion included workload, performance and failures to comply with loan application assessment processes. Often issues were dealt with as they arose, without waiting for a one-on-one meeting.
12. Money3 conducted audits initiated by team leaders who would review loan application files for each credit analyst. The purpose was to assess whether the credit analyst had followed the required loan application processes. To the best of Ms Costantini's recollection, the audit occurred on a monthly basis.
13. Credit analyst meetings, during which the loan application assessment process was discussed, were sometimes held. Ms Costantini recollects attending no more than four between March 2018 and December 2018, when she worked in the Micro Motor Department. During these meetings selected files would be worked through, and issues discussed.
14. There were also infrequent "boardroom" meetings between members of the Micro Motor Department, that would be initiated after a change in policies or procedures; for example the introduction of the new version of the Product Guide.
15. Finally, there were "team huddle" meetings between all team leaders, credit analysts and credit support offices which were usually held each Wednesday morning. Issues were raised and discussed.
16. Ms Costantini was not effectively challenged in her evidence in cross-examination on these matters (T 402-409). She denied a series of propositions to the effect that not every credit analyst received the training that she described: on her evidence the standard processes were followed. Several questions were put to her based on the evidence given by Mr McAuley during his compulsory examination, that he could not recollect receiving training of the type described by Ms Costantini, his files were not audited and he did not have one-on-one catch ups with his team leader. Ms Costantini could not answer for Mr McAuley, but maintained her standard practice evidence. Subsequently, it emerged that there is a documentary record of the training that Mr McAuley received between 16 October 2018 and 22 June 2020. Within that period, he is recorded as having enrolled and completed 30 separate courses ranging across: National Consumer Credit Protection Act Awareness, National Credit Code Awareness, Money3 Policies and Responsible Lending. That document significantly undermines the evidence of Mr McAuley who was not called as a witness. I place no weight on his evidence about training or audits.
17. Ms Costantini accepted that the ELMO training modules did not give specific directions about the procedure as to how a credit analyst should undertake the assessment of a loan application or carry out their duties on a day-to-day basis. She also accepted that there is no documentary evidence of the various meetings that she described in her evidence.
18. In my assessment, Ms Costantini was a careful and considered witness who was straightforward, direct and honest in her answers on the training issue. I have no hesitation in accepting her evidence-in-chief, and I find according to it.
19. Ms Cavar's relevant evidence-in-chief as to the training, oversight and procedures for the settlement officers was as follows. She referenced the Settlement Procedure document (CB 8459), which she is responsible for maintaining and updating. She has been employed by Money3 or related entities for 17 years. Since January 2018 she has been the settlements manager for Money3. The settlements department was relatively small in the relevant period comprising herself, one or two team leaders and around 10 settlements officers.
20. All new employees, during the relevant period, in the settlements team received one-on-one training from Ms Cavar or from a settlements team leader. The settlement procedure document formed the basis of that training. It details the steps to be taken by the settlement officers. New settlements officers would initially work alongside a more experienced officer for the first few weeks of their employment. Initially, they would observe the process. They would then be monitored by the experienced officer for a few days. Once the experienced officer was satisfied that the new officer understood the process and was competent, they would be permitted to undertake settlements alone. However, each settlement file worked on by a new employee would be checked by a more experienced officer before making the welcome call.
21. All settlements officers (not simply new officers) completed online training modules about the policies and procedures of Money3. A training record is maintained. Ms Cavar references a record of her training between 17 May 2018 and 24 July 2019 (CB N 723) that she completed the modules: National Consumer Credit Protection Act Awareness, National Credit Code Awareness and Responsible Lending. These are the same modules referenced by Ms Costantini.
22. From July 2020, every month the settlements team leaders would complete an audit of three randomly selected settlement files for each settlement officer. The purpose was to provide continuing training and to provide more intense oversight of the work carried out by the officers. The audit process included a reprocessing of the settlement by reference to a pre-fund checklist. The checklist is in evidence (CB N 839). When an issue was brought to the attention of Ms Cavar, her practice was to send an email to the employee concerned and the required steps to address it. She gives as examples of the issues that she raised during the relevant period: reminders to check that what is recorded in the APL matches the information in the settlement documentation and of the need to follow-up communications with brokers and customers.
23. From July 2020, it was her practice to review daily sales reports to check that settlement files in the APL were being completed as required.
24. She was not challenged on this evidence in cross-examination. I have no reason to doubt her evidence and find according to it.

1. ASIC's contention (a) cannot be accepted. I have explained in Part 5.4 that ASIC has not established why the HEM benchmarks, though an available measure in the relevant period, would have been used by responsible lenders to assess comparable loans to those in issue. I have also explained that ASIC has not established by reference to the evidence of Mr Harris (when read with the s 49 responses) that the methodology employed by Money3 to determine the amount for general living expenses was arbitrary, not a reasonable approximation of living expenses for the class of consumers in issue and why his examination evidence falls short. It follows that ASIC has not established that Money3, by requiring its representatives to apply the greater of declared or Product Guide general living expenses, contravened s 47(1)(g).
2. Contention (b) has many moving parts. As to the generic content and inadequate explanation submissions, ASIC contends for findings of fact as follows. The ELMO National Consumer Awareness Training Module (CB 6223) provides limited awareness of key obligations, is not tailored to employees accountable and responsible for the assessment of consumer unsuitability, is overly generic and provides no practical guidance as to how the obligations are to be applied. Also, it was created before Westpac and the updates to RG 209 and does not provide guidance in terms of what additional questions to ask or how to treat and assess specific responses. In large measure these submissions depend on acceptance of the evidence of Mr Hartman at [783], [820], [822] and [936] of the Expert Report.
3. ASIC makes very similar submissions for the Responsible Lending training module (CB 6321), the Supporting Vulnerable Customers in the Finance Industry module (CB 6682) and the National Credit Code Awareness module (CB 7011). In each case it relies on paragraphs in Mr Hartman's Expert Report.
4. To the extent that these submissions rely on the analysis in Mr Hartman's Expert Report, I cannot accept them. The documents in their terms do not make out the ASIC case. Whilst they are drafted at a high level what must not be overlooked is that they are not directed to lawyers; but are intended to provide practical guidance as to the content of the statutory obligation which is directed to ensuring adequate training of representatives to a level of competence that meets the threshold requirement of being able to engage in the credit activities authorised by Money3's licence. Nor should they be considered in isolation from the on the job training and experience set out in the evidence of Ms Costantini and Ms Cavar. The documents are not, and do not purport to be, specific step by step instruction manuals as to what the Act requires a licensee to do in order to meet its statutory obligations. That reflects the fact that the obligations are not cast in prescriptive terms and leave it up to the licensee to determine in the particular circumstances what reasonable inquiries and verification steps about the consumer's requirements, objectives and financial situation should be undertaken and correspondingly, how the unsuitability assessment should proceed. ASIC has not established why providing generic guidance as to these matters, for example, falls short of the obligation to ensure that representatives are adequately trained and competent.
5. The next aspect of this submission is that the training materials were not updated to reflect relevant case law or ASIC regulatory guidance. Westpac is the case law relied on. ASIC correctly submits that the Quality Review for Finance Brokers Policy of January 2018 (CB 6111), foreshadowed review on an as-needed basis in "line with major policy and regulatory changes to ensure it remains relevant and applicable" (CB 6115). ASIC contends that it has not been updated despite "numerous events" since January 2018 which had "implications for changes to the expectations of brokers that would prompt review", including RG 209 and Westpac.
6. The Policy is an outline document concerned with the review of finance brokers accredited with Money3. It sets out the principles pursuant to which accredited brokers will be monitored: the volume of loan applications submitted, the number declined, the number approved, approved loans in arrears, feedback from Money3 staff, information from complaints and information supplied by aggregators and lenders (CB 6114).
7. I reject the ASIC submission. This aspect of the case is concerned with Money3 and its representatives, it is not a roving inquiry into the relationships between Money3 and brokers, each of which separately held credit licences. Once again, ASIC must be held to its pleaded case.
8. The next document identified by ASIC for this submission is the National Consumer Credit Protection Act Awareness training module (CB 6223). I am unable to accept the ASIC submission. It rests on an assertion by Mr Hartman in his Expert Report at [783], [820], [822] and [936]. The effect of his evidence is that he did not notice updated modules of this document as listed in the training records of Money3. At [936] his reasoning includes: "given the nature of the changes both presented in these areas, it would be reasonable to expect updates". That opinion depends on acceptance of his corresponding evidence of the minimum expectations the practices of reasonable and prudent lenders, which as I have explained I am not able to make findings of fact in accordance with.
9. There are further difficulties with this submission. The decision of Perram J in Westpac PJ was delivered on 13 August 2019. The Full Court judgment was delivered on 26 June 2020. Mr Hartman accepted in cross-examination that in September 2019 there was "a significant degree of uncertainty on the part of lenders as to what the relevant provisions in the Act required" (T 346). The primary effect of the majority reasons in the Full Court is that the legislation leaves it to the licensee to determine what reasonable inquiries and reasonable verification steps will be undertaken to inform the unsuitability assessment. The submission does not explain what update was required, or to what effect, in consequence of the decisions in Westpac PJ and Westpac. Nor does it explain what update was required in consequence of the publication of RG 209.
10. The submission also fails to address whether ELMO as the external provider and author of the document updated the module and if not, why not. There is no evidence about that and ASIC has not explained why it was not reasonable for Money3 to rely on material prepared by a third party.
11. Another difficulty is the inconsistency between this submission and the evidence. Ms Crowe gave evidence in cross-examination (T 218) that the training provided to staff included the training modules, policy or procedure documents and that when they were updated, the training would also be updated. Evidence to the same effect was given by Mr Harris during his examination (CB 5080).
12. Accordingly, I cannot accept this aspect of the submission.
13. The next matter ASIC relies on is that the Credit Analyst's Guide of November 2017 was never updated. The submission is that given internal policy changes and court decisions, the document should have been updated "multiple times". This submission is cross-referenced to paragraphs [856], [858] and [859] of Mr Hartman's Expert Report. None of them support the submission. Assuming that ASIC's submissions contain a mistake and the first reference intended is [855], the paragraphs do not support the submission, which in part, without attribution, adopts the language of Mr Hartman. Mr Hartman does not explain his reasoning: rather, he simply makes a conclusionary statement about unidentified internal policy changes (save for one reference to an email of 31 July 2019) and external court decisions, as requiring multiple updates of this policy. The email was sent by Mr Harris and is concerned with the need to exclude maintenance income as disclosed on Centrelink statements because this is the amount that the consumer is "supposed to receive", but in practice it might not be received. There is no explanation why this policy document was required to be updated to reflect that internal direction. In any event, this opinion also turns on Mr Hartman's assertion of the minimum expectations of reasonable and prudent lenders, which as I have said does not provide an exposed basis for me to make findings of fact.
14. The further difficulty with this submission is that ASIC does not explain what changes were required to the document and why. For these reasons, I reject this aspect of the submission.
15. Next there is reliance on the updated 1 May 2020 Responsible Lending Policy (CB 6531). This time the criticism of ASIC is that the document was updated six months after publication of the Full Court decision in Westpac and nine months after publication of RG 209. This submission is cross-referenced to paragraphs [783], [784], [785], [798] and [818] of Mr Hartman's Expert Report. The ASIC submission replicates the language at [783], where Mr Hartman contends that the time that it took to update the policy was between three and six months slower than the updates of reasonable and prudent lenders. Once again, Mr Hartman does not identify which reasonable and prudent lenders acted with greater alacrity. For that reason I am not able to make the asserted finding. In any event, there is no explanation as to why the time that elapsed before the update to the policy was published amounts to a failure to comply with the obligation to ensure that representatives of Money3 were adequately trained and competent: s 47(1)(g).
16. The focus of ASIC then turns to the Risk and Compliance Presentation dated October 2020 (CB 6680). This is a dated list of various policies as published by Money3 between January 2019 and July 2020. There is a status column where the policies are either marked as "final", "to be drafted" or "drafted", but subject to review. The ASIC submission is that 12 of the 39 policy documents were not in operation at the time because they were in draft form. Of the remaining 27, 9 were in use for more than 12 months without being reviewed or updated. This submission is cross-referenced to paragraphs [821] and [915] of Mr Hartman's Expert Report. At the risk of unnecessary repetition, each of these paragraphs contain various conclusions of Mr Hartman based on his review of Money3 documents in contrast with his asserted minimum expectation being the practices of reasonable and prudent lenders and for that reason, I cannot accept the findings of fact which ASIC submits should be made.
17. The final aspect of submission (b) is that the training materials did not include specific training for those responsible for governance, which ASIC defines as management and executives. The factual finding which ASIC seeks is set out at [228] of the schedule to the closing submissions, expressed as:

Those in governance roles received no training on what they practically need to consider and do in their oversight and governance roles in order to comply with the regulatory requirements. There are no training materials providing an explanation tailored to management, executives and board members as to the consequences of non-compliance with regulatory requirements. Money3's Credit Licence - Continuing Professional Development Report for the 2021 Calendar Year records 50% compliance and that Craig Harris' CPD was in progress but not complete.

1. Submissions to the same effect are expressed at [229] and [232]. The evidence relied on commences with paragraph [913] of Mr Hartman's Expert Report, which as usual turns on his undisclosed minimum expectations being the practices of reasonable and prudent lenders which, this time, he contends were "essential". I will not repeat why I cannot make the contended finding of fact, but in addition I note that in his reasoning Mr Hartman makes an unexplained assumption that "tailored training" was not provided to management, executives or board members. In any event, Money3 is correct to submit that ASIC has not identified the specific training that he contends should have included the management and executives in order to meet the s 47(1)(g) obligation.
2. For all of these reasons, I reject contention (b).
3. Moving to contention (c), this is concerned with the completion of regular retraining in response to identified complaints in breach reporting. In the schedule to the ASIC submissions there are two elliptical references to the relevant facts that it contends should be found: [205] and [232]. They are of little assistance. The contended fact at [232] references two Complaints Presentations (CB 7050, 7072). Each is an internal document that addresses specific loans where complaints had been lodged with AFCA. Each is a relatively detailed analysis, including recommendations to avoid similar complaints in future loan assessments. The ASIC submission is that the presentations contain recommendations but no action items or requests for approval and there is no evidence of continuing action or requests made by governance teams. These submissions find expression in Mr Hartman's Expert Report at [915], which contains assertions by reference to his undisclosed minimum expectations of reasonable and prudent lenders. Beyond that, it is difficult to comprehend what the ASIC complaint is: the documents did address the failures, contained recommendations to avoid similar failures in the future and recorded the outcome that each complaint had ultimately been resolved. ASIC fails to identify the evidence in support of the contention that Money3 staff did not complete retraining in response to these complaints. Nor has ASIC identified why the assessment of the complaints fell short of the requirement to ensure that representatives were adequately trained and competent. Accordingly, this contention fails.
4. Contention (d) is that the training materials did not include instruction on how the obligations of Money3 were to be complied with. This covers the same ground as contention (b) and there is no distinct identification of any difference in the contended findings of fact in the schedule to the ASIC submission. I reject it for the same reasons.
5. Contention (e) overlaps with a component of contention (b). The difference is the focus on training to identify risk and compliance to then ensure that corrective action was undertaken. The only specific example in the schedule to the ASIC submission is [223] which references the "glitch" in the APL system whereby certain expenses were not replicated in the approval documents and consumers signed documents which included blank spaces for relevant data. According to the evidence of Mr Harris in his compulsory examination (CB 5134-5137), when the issue was noticed it was referred to the IT department to rectify, which process: "probably took longer than what we wanted to be rectified", but he could not be certain as to the timeframe - his best answer was "more than a few months". Mr McAuley in the course of his compulsory examination (CB 4826) said "I think that went for almost a year".
6. ASIC has established an IT issue that resulted in incomplete documents being generated for consumers to sign. So far, so good. But the issue raised by this contention is concerned with the absence of appropriate training to management and executives to identify compliance issues, such as the IT fault with the APL system. The ASIC submission fails to identify what training material is referred to and why it was inadequate within the meaning of s 47(1)(g). Indeed, how training materials might have been at all relevant is unexplained: the problem was identified, was referred to the IT department and the issue was the period that it took the IT department to fix the problem. ASIC has adduced no evidence to the effect that the time taken by the IT department evidences a contravention of statutory obligation. This contention is therefore rejected.
7. Finally for the s 47(1)(g) case, there is contention (f). This is framed as a conclusion following acceptance of each of the earlier contentions, by reference to analogous provisions in the Corporations Act as considered in several cases. The first case relied on is Australian Securities and Investments Commission v Lanterne Fund Services Pty Ltd [2024] FCA 353 at [68], McEvoy J. That was an admitted contravention case where his Honour observed that the combination of statutory provisions there referred to require that the holder of an Australian Financial Services Licence "should undertake a continuing training program to produce competent representatives or maintain their level of competence". That general proposition is not in dispute in this proceeding. But it is of no present assistance because ASIC has not established that Money3 failed to implement an adequate training system designed to achieve competent representatives to engage in the activities authorised by its licence. For the same reasons, none of the other cases relied upon by ASIC for that submission are of assistance.
8. For these reasons, ASIC has not established the contraventions relied upon to establish the s 47(1)(g) case.

Issue 7: s 47(1)(e)

1. For contention (a), the first item that is said to evidence inconsistency, the absence of practical guidance and a failure to formally review and update is the May 2020 Credit Policy (CB 6514) as particularised at item [196] of the schedule to the ASIC submission. There are seven separate contentions. The gravamen of the complaints fall into four groups. The first is that clause 9.3 (which is concerned with minimum living expenses) requires that when the amount of the loan exceeds $8,000, an additional buffer of at least $135 per week is to be added, when there is no evidence of the undertaking of any robust analysis or sound reasoning in support.
2. This complaint generically relies on paragraphs [783], [785], [810] and [818] of Mr Hartman's Expert Report which turns on his assertion of the minimum expectations of reasonable and prudent lenders. To that extent I do not make findings of fact conformably with it.
3. Moving away from Mr Hartman's evidence, the ASIC submission is that "in practice" it is clear that the value used to apply the policy differentiation was the vehicle purchase price. In the case of the six consumers in issue, the purchase price on each occasion was $8,000, but with the add-ons, the price increased to over $11,000. That may be accepted, but it does not establish the contention that Money3 failed to take reasonable steps to ensure that its representatives complied with the Act. To the extent that the submission draws on the more general submission that the living expense amounts in the Product Guides were arbitrary and not a reasonable approximation or appropriate benchmark of the consumers reasonably necessary expenses, it fails for the reasons that I have given above: ASIC's evidence falls short of establishing those facts.
4. The second is that the May 2020 Credit Policy (CB 6514) at clause 9 requires that credit analysts must inquire into and verify living expenses according to the requirements in the Responsible Lending Policy, which is inconsistent with the Responsible Lending Policy which at clause 8 (CB 6535) states that Money3 "will make further inquiries where ... the consumer has options about features that may be available under the credit product that will affect the cost of the product to the consumer". There is a similar statement in clause 12 (CB 6538) as to making inquiries about the consumer's requirements and objectives.
5. The asserted inconsistency does not exist. The May 2020 Credit Policy at clause 9, in alerting credit analysts to make inquiries and undertake a verification of living expenses "according to" the requirements of the Responsible Lending Policy, aligns with the circumstances where "further" inquiries will be made in defined circumstances.
6. The third is that the May 2020 Credit Policy "includes eligibility requirements for various Centrelink benefits as income, but does not effectively address how expenses of applicants reliant on such benefits should be assessed or where such applicants had little or no evidence of savings" which is taken directly from paragraph [785] of Mr Hartman's Expert Report. Although unstated, that must be a reference to clause 8 of the May 2020 Credit Policy (commencing at CB 6518) which is concerned with minimum income amounts for loans above $8,000, where an applicant must be employed, and that Centrelink benefits "are acceptable forms of income in addition to paid employment". Beyond that, the submission is difficult to understand and is otherwise unexplained. As such I cannot accept it.
7. The fourth is that on 31 July 2019, Mr Harris sent an email to all staff concerning the treatment of maintenance income and to the effect that it should not be included as disclosed in the Centrelink statements because that was not evidence that the amounts were actually paid and received. There is no basis to contend that the advice of Mr Harris was wrong and the fact that this topic was not addressed in the November 2017 Analyst's Guide or the May 2020 Credit Policy does not advance the contravention submission. The fact is that a senior manager of Money3 sent an email by way of guidance to staff, and one would ordinarily expect that staff would implement his requirements. Indeed, the email is jarringly inconsistent with the contention that the procedure documents were "missing practical guidance to staff".
8. The next matter of inconsistency is the contention at paragraph [218] of the schedule to the ASIC submission that of the 17,651 Micro Motor loans made within the relevant period, one third listed a vehicle value of greater than $8,000 and to $59,990, which exceeded the value used to define the M3 Asset Finance Product and was inconsistent with the definition of Micro Motor in the Product Guides. That contention strays outside of the pleaded case, and is rejected accordingly.
9. Item [220] of the ASIC schedule identifies the next matter of inconsistency, by reference to the "lazy broker" procedure (CB 7086). ASIC contends that this permitted a broker to only gather basic information about the purchase of a low value motor vehicle, which is inconsistent with the Broker Division Manual which requires a completed application form (CB 6117, 6126). The submission is misconceived. As correctly submitted by Money3, the lazy broker process is not used for broker submitted Micro Motor loans. Rather, it applies where a broker refers a customer to Money3, for it to deal directly with the customer: Ms Costantini explained that in her affidavit at [38] - [39], as did Ms Crowe in cross-examination (T 216).
10. The final contended inconsistency is at item [222] where ASIC submits that the Broker Accreditation Form is inconsistent with the Quality Review for Finance Brokers Policy in that it seeks no information about the broker's knowledge of applicable regulations of Money3 policies. At this late point in the analysis, it should not be necessary to remind ASIC that it has not pleaded a case that concerns the conduct obligations of Money3 vis-à-vis brokers and I reject the submission for that reason.
11. Finally, there is the absence of formal review contention, which is no different from the review contention I have addressed when dealing with the s 47(1)(g) case and it fails for the same reasons.
12. For these reasons, contention (a) fails.
13. Contention (b) is concerned with the adequacy of Money3 systems to ensure that required information was gathered. At item [204] of the ASIC schedule, the submission is that the final assessment for Consumer 1 failed to include an additional allowance of $50 per dependant per week for three dependants who were disclosed on the broker application form. I have dealt with this in the analysis for Consumer 1. There is an allowance of $150 in the APL capacity calculator (CB 2646). It has been omitted from the Final Assessment (CB 2643) but as explained by Ms Costantini in her affidavit at [116], the document was not used. Its status has not been established by ASIC as one whereby information that was gathered and applied for a statutory purpose. The same analysis applies to the failure to record any amount for food and entertainment in the document (CB 2644). The contention fails accordingly.
14. Contention (c) returns to the November 2017 Credit Analyst's Guide (CB 6081) and the submission is that it did not address obligations to verify information that was gathered and encouraged staff to override other policies. Items [178] and [179] of the ASIC schedule are relevant. The submission is founded on paragraphs [856], [858] and [859] of Mr Hartman's Expert Report which, as a reader of this judgment will have appreciated by now, turn on the undisclosed execution framework, minimum expectations and practices of reasonable and prudent lenders and I do not make the contended findings of fact.
15. Whilst the Credit Analyst's Guide does not explicitly reference the obligation to take reasonable steps to verify the consumer's financial situation, the document cannot be read in isolation from the training that was provided to credit analysts and the other policy and procedure documents that applied during the relevant period, such as the National Consumer Credit Protection Act Awareness Training module (CB 6223) and the May 2020 Credit Policy (CB 6477) each of which referred to the reasonable steps to verify obligation. Further, ASIC has not adduced evidence as to how the Credit Analyst Guide encouraged staff to override these policies. The consistent finding that I have made is that the minimum general living expense amounts in the Product Guides were only applied where greater than the declared amounts for living expenses. Finally, ASIC has not explained why the Credit Analyst's Guide was out of date, a fact not addressed in the schedule items. Although it states that Money3 has only produced one version of the Guide, that is hardly sufficient to found the submission. For these reasons I reject this contention.
16. Contention (d) is concerned with the impact of overwriting data and the use of text fields on the ability to monitor compliance. This contention is obliquely addressed at item [226] of the ASIC submission. It is put in this way:

Money3 analysts were not required to record the logic they applied in making decisions. The use of text fields (rather than a mandated system of combination of flags, drop-down fields and text fields) compromises Money3's ability to pragmatically monitor what happened in the case of record overrides. This results in cases when notes are expected but not made (for example, where reductions and expenses are identified).

1. Two evidentiary sources are relied upon. Routinely, the first is paragraphs [892] - [894] of Mr Hartman's Expert Report which, on this occasion, turns on his identified requirement of monitoring, which is the sixth element of his execution framework, as one of the minimum expectations of unidentified reasonable and prudent lenders, and for that reason I do not find according to his evidence. The other is the Complaints Presentation (CB 7055) which is given as an example of the inability of Money3 to locate evidence that a credit analyst considered or discussed a reduction in expenditure with a consumer in order to meet their loan commitments. That is a submission of one failure by one credit analyst, on one loan at one point in time. It does not support the conclusion that Money3 failed to take reasonable steps to ensure that its representatives complied with the Act.
2. Moreover, it overlooks that the Act does not specify how data is to be entered for the purpose of meeting the ss 128, 129 or 130 obligations.
3. Accordingly, contention (d) fails.
4. Contention (e) asserts limited compliance reporting and no reporting to front-line staff. There is no corresponding item in the schedule to the ASIC submissions that identifies any finding of fact in support and it fails for that reason. Further, to an extent this contention overlaps with contentions (d) and (e) that I have analysed under the s 47(1)(g) case and it fails for the same reasons.
5. Finally, there is contention (f) which is concerned with a failure to monitor and supervise representatives to ensure that compliance concerns were escalated and actioned. This is a conclusionary submission, not separately addressed in the schedule of items, and which flows from establishing a contravention by one or more of the specific contentions. It falls with them.

1. The ASIC case has succeeded in very limited respects. The hearing must be adjourned to receive submissions about relief. In the meantime, ASIC must file a draft of the declaratory relief that it seeks consistent with the established contraventions. Thereafter, this proceeding will require further case management.

I certify that the preceding seven hundred and ninety (790) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.