EOFY Sale · Save up to $750 off your legals · Ends 30 June

Claim offer
Selected cases

High Court of Australia · [2019] HCA 18

ASIC v Kobelt

A High Court case about book-up credit, unconscionable conduct and financial services conduct involving vulnerable customers.

High Court of Australia12 June 2019

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

Get legal help

Start here

Quick read

  • Kobelt is not permission to run informal credit loosely.
  • A High Court case about book-up credit, unconscionable conduct and financial services conduct involving vulnerable customers.

Use this to check

  • Unconscionable conduct is highly fact-specific and can be contested even on difficult facts.
  • Informal credit systems may still create licensing, credit and conduct risk.
  • Vulnerable-customer models need careful controls and plain consent records.

Decision snapshot

  1. 1

    What happened

    • Mr Kobelt operated Nobby's Mintabie General Store and provided a form of informal credit known as book-up, largely to Anangu customers from the APY Lands.
    • Customers supplied debit cards and PINs, and Mr Kobelt used them to withdraw most or all of the customer's funds around payday, while allowing further purchases on credit.
    • ASIC alleged the system was unconscionable.
  2. 2

    What the court had to decide

    • The High Court had to decide whether Mr Kobelt's book-up system was unconscionable under the ASIC Act.
    • The issue required close attention to the customers' circumstances, the system's advantages and disadvantages, and whether the conduct should be characterised as against conscience.
  3. 3

    What the court decided

    • By majority, the High Court dismissed ASIC's appeal on unconscionability, although ASIC's separate unlicensed credit findings from earlier stages remained significant.
    • The narrow result makes the case important, but not a safe template for credit conduct.

Practical impact

Practical read

  • Kobelt is not permission to run informal credit loosely.
  • Businesses dealing with vulnerable customers should treat credit, consent, account control and repayment systems as serious compliance and conduct risks.

Useful next steps

  • Unconscionable conduct is highly fact-specific and can be contested even on difficult facts.
  • Informal credit systems may still create licensing, credit and conduct risk.
  • Vulnerable-customer models need careful controls and plain consent records.
  • Do not hold customer cards, PINs or account access without specialist advice.
  • Check credit licensing and financial services rules before offering deferred payment products.

Practical read

Kobelt is a difficult case because the High Court split closely and the facts were tied to a particular remote-community credit practice. The majority did not find statutory unconscionability, but the decision should not make any business comfortable about taking control of customer cards, PINs or income streams.

The safer business reading is conservative. If your model involves credit, vulnerable customers, repeat deductions, informal accounts or practical control over a customer's money, you need compliance advice before scaling it.

Checks to run

Key points

  • Do not hold customer cards, PINs or account access without specialist advice.
  • Check credit licensing and financial services rules before offering deferred payment products.
  • Build vulnerable-customer safeguards into sales, collections and hardship processes.
  • Keep consent, repayment and complaint records clear and accessible.

Key takeaways

  • Unconscionable conduct is highly fact-specific and can be contested even on difficult facts.
  • Informal credit systems may still create licensing, credit and conduct risk.
  • Vulnerable-customer models need careful controls and plain consent records.

Related topics

Finance, Payments & SecurityConsumer Law & Trading

How Sprintlaw can help

Regulatory ComplianceContract Review