GE Finance

Reporter: Marguerite McKinnon

You can make a lot of money, lending money.More than $4-Billion dollars, in just a quarter, if you are GE. Much of it, by "bullying" the people who've borrowed it. Bullying so hard that the consumer watchdog's had to step in - to do something it's never done before.

Make them pay compensation for their outrageous tactics. "GE Money is well known to the financial counsellors, those people who work with people who are in financial distress." Kel O'Brien is a fencer and bought a fridge and lounge suite though Harvey Norman. It was so easy, but he didn't expect the sting. "People can have hiccups. People can stumble and fall over and all sorts of things can happen to you and to be able to take a bit of compassion and reason rather than just stomping over some poor bugger when he's down. I mean in Australia we've got the thing that you don't kick someone when they're down. Well not with debt collectors" said Kel. And NOT with GE Money.

"You pay your bills on time and you still get slugged with these payments for paying at the post office or paying by BPay" said Kel. And the costs continue. "If you're a couple of days late, $35 for a couple of days late and yet their interest is enough to kill you so you reckon they're making enough money." Robert Bradbury received a GE Credit Card from Target with a 17 and a half percent interest rate."

He's been paying it off and off for the past four years. "I've paid them well over $4,000 and the initial card was $3,000 and I still owe them $4,900. I don't know why. I want to know why am I paying all this money? It's never coming down. It's going up instead of down!" said Robert.

Robert's repayments seemed to disappear. The GE Money began a series of threats and bullying. GE Money would not let Robert cancel his credit card. "We'll take you to court, it's going to cost you you're going to lose we've got the money we've got the money to do it, you haven't. You're going to lose you're going to end up paying us plus all the court costs. Ordinary folks can't do that, they can't stand up to that sort of financial pressure."

GE Money is Australia's biggest consumer credit provider. It has more than 3 million customers in Australia and New Zealand, 200-thousand people have used GE money to buy a car. And GE Money is no stranger to Today Tonight. Former staff have spoken out about pressure tactics on pensioners, single parents and those who can least afford to pay.

Christopher Zinn from Consumer Group Choice. "If you default in any of your repayments, suddenly your interest rate shoots through the roof to an extraordinary amount and then you have to pay for the full amount that was owing and this can really get people into hot water."

Now, some payback. The Australian Securities Investment Commission or ASIC has ordered GE Money to compensate more than 1000 consumers who owed money, because of the appalling bullying tactics they were subjected to. "Harassing people on the phone, calling neighbours and some of the other things that have come up in terms of this report are really something that belongs to the last century" said Christopher Zinn from Choice.

GE Money is accused of calling some defaulting borrowers 100 times a month. Others were called 10 times a day, were contacted at their workplace, had late night debt collection visits, even contacting third parties - family members, work colleagues, even neighbours.

"Heavying people in one way or another. Intimidating, harassing these kind of words really shouldn't be coming up in this day and age they really belong to the bad old practices of old." ASIC found GE Money was "poorly managed.....and wasn't meeting legal obligations." And that staff were selling insurance to customers whose needs had not been identified of understood." In a rare move ASIC has taken control over GE Money's licence, demanding GE Conduct an:

* Independent Review

* Ensure Fair Compensation

* Obey all ASIC recommendations

* Ban staff from giving "personal advice"

If GE does not comply, it loses its licence. It's a tactic which has reaped rewards for this giant company. GE profits for just the first quarter of 2008 was more than four billion dollars.

"While the penalties might seem as a bit of a slap on the wrist there are going to be compensation which GE Money has to pay and it will be very interesting to see how high that adds up. But can you really compensate people for the distress that comes from harassment, upteen calls a day, the sort of pressure which seems totally unnecessary and counter productive if you're trying to work with someone to get them. ASIC's credit crackdown on GE Money is just the tip of the iceberg. The Commission is also investigating GE Money's Insurance arm. Consumer groups say that GE Money has made a business out of selling exorbitant insurance packages to people who don't need it, or can't afford to pay " said Christopher.

"There are sharks out there, pay-day lenders all sorts of other people who will lend money to people who can ill afford it and that's their kind of business model."