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Australia cancels credit licence of home appliance rental / hire purchase company.

BIScom Subsection: 
Editorial Staff

The Australian Securities and Investments Commission (ASIC), which federally regulates a wide range of businesses, has cancelled the credit licence of S & S Enterprises Pty Ltd, trading as appliance rental business Rent To Own Appliances.

ASIC found that the rate of interest applied in a number of cases could be an effective rate of as much as 208% . There is a statutory maximum of 48%.

The company has agreed that it will collect no more instalments on current contracts and transfer ownership of the goods under those agreements to the customer. It has also agreed to maintain its membership of the Credit and Investments Ombudsman scheme for at least 12 months to deal with any matters arising from other agreements.

The agreements, known in Australia as "rent-to-buy" are a misnomer: they are not a form of hire purchase under which the goods may be bought for a final payment, known as an option payment because the purchaser exercises an option to purchase, or returned to the supplier. Under a rent-to-buy contract, the goods are in fact purchased and then paid for by instalments. There is no option to purchase, and therefore, no right to return the goods.

The company sold, via "rent-to-buy" contracts, furniture and household appliances. It had a website at www.renttoownappliances.com.au (not reachable today) and operated from Victoria.