Review to examine lending practices, dispute resolution, and potential consumer risks
The Australian Securities and Investments Commission (ASIC) has launched a review of the motor vehicle finance sector, focusing on consumer protections, particularly for borrowers in regional and remote areas, including First Nations communities.
The review will assess lenders, brokers, and intermediaries for compliance with responsible lending obligations. It will also examine loan default management, hardship practices, and dispute resolution processes. Seven lenders are initially included in the review, with additional brokers and intermediaries expected to be assessed as the project develops.
ASIC has signalled that enforcement action may follow if misconduct is identified.
“We will take enforcement action to protect consumers where appropriate,” the regulator stated. “Our focus will be on the motor vehicle finance sector broadly, noting misconduct in used car finance sold to vulnerable consumers remains a key enforcement priority for ASIC in 2025.”
The review comes amid broader scrutiny of car finance practices in the UK, where the Financial Conduct Authority (FCA) is investigating discretionary commission arrangements (DCAs). UK regulators are assessing whether lenders and motor finance firms have breached consumer protection rules, potentially leading to financial losses. The issue has drawn government intervention, with concerns over large-scale compensation claims and regulatory uncertainty affecting the sector.
ASIC has already taken legal action against car finance company Money3 Loans, alleging breaches of responsible lending obligations. The regulator has also filed proceedings against car dealership Diamond Wheels, Keo Automotive, and a former director for allegedly issuing unlicensed car loans with excessive interest rates.
“We continue to investigate other matters in the sector,” ASIC stated.
The review aims to strengthen industry compliance, improve lending practices, and minimise consumer harm. ASIC plans to publish initial findings in the second half of 2025, followed by a more detailed public report.
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