ABB has struck back at a court ruling that it is in contempt of court over its scheme to give green credit to borrowers.
Key points:Banks will not be allowed to pay more than 30 per cent of the debt owed to borrowersThe scheme has been dubbed the “triadical credit scheme”The court’s ruling comes after a Federal Court judge said it amounted to fraudThe scheme had been dubbed “the triadical scheme”It was not immediately clear whether the banks would appeal the ruling.
Key Points:The Federal Court has ruled that the scheme is not a fraudThe banks have been given a month to appeal the decision, but they have until next Friday to do soThe Federal Government has said the scheme has not been a fraud and it will continue to enforce the debt repayments.
The Federal Circuit Court of Appeal has heard that the banks have not done enough to stop the scheme.
It is the second time the scheme was ruled a fraud, and the first time the courts have ruled it illegal.
Banks have been told they have a month, beginning on Friday, to appeal.
The scheme is set up under the Consumer Credit Protection Act (CCCPA).
Under the scheme, banks must make payments of up to $3,000 to borrowers on their first repayments of the scheme and a maximum of $9,000 for each subsequent payment.
Borrowers who fail to make repayments are not allowed to be charged back the debt they owe.
The banks will not have to pay the full amount.
Banking groups are concerned that the Federal Government’s decision to stop enforcing the debt repayment scheme will lead to a massive surge in fraud.
But the Federal Circuit has not yet ruled on whether it will rule against the banks.
In a statement, the Federal Reserve Bank said the banks “must ensure compliance with the CCCPA and other financial regulations” as a result of the decision.
“If they fail to comply with these obligations, they risk violating the law,” the statement said.
“The CCCPPA applies equally to the banks.”
The banks are also required to ensure they “immediately and promptly” repay any debt owed.
The bank group said it would “receive and respond to any notices of compliance” from the Federal Department of Consumer Affairs.
In the meantime, the banks are now required to “take appropriate measures to identify and promptly report instances of fraudulent activity” and “to implement appropriate corrective measures to address the problem”.ABC/ReutersTopics:consumer-finance,credit,law-crime-and-justice,consumer-protection,federal—state-issues,government-and -politics,bankers,finance-and-(financial-services-and)market-economics,banker-and—finance