The move ensures protection against high-cost lending products
Corporate regulator ASIC has extended its product intervention orders for short-term credit and continuing credit contracts, effective until revocation or automatic expiration on Oct. 1, 2032.
The target market for these financial products includes vulnerable retail clients experiencing financial difficulty, seeking loans for basic living expenses. Many of these clients had been previously declined for regulated credit and were subject to substantial fees associated with the provided credit contracts.
ASIC intervention
Implemented on July 15, 2022, the orders aimed to enhance consumer protections by preventing the provision of short-term and continuing credit contracts that imposed unreasonably high fees, surpassing the cost caps stipulated by the National Credit Code.
ASIC’s intervention has proven effective in mitigating the risk of significant harm resulting from such high-cost lending products.
In a media release, Sarah Court (pictured above), ASIC deputy chair, emphasized the importance of the extended orders in maintaining ongoing protection against predatory lending practices targeting vulnerable consumers.
“Extending these product intervention orders ensures continued protection in the market against these high-cost lending products,” Court said. “Predatory lending practices targeting vulnerable consumers is an ongoing priority of ASIC, and we will continue to intervene to address this type of conduct.”
ASIC’s regulatory orders on credit contracts
This development follows previous consultation and action by ASIC, as detailed in Consultation Paper 355 released on Dec. 9, 2021. The initial product intervention orders were made on July 15, 2022, after ASIC found that these financial products caused significant detriment to retail clients, especially when provided alongside high-cost services.
On Aug. 10, 2023, ASIC sought feedback on the proposal to extend both product intervention orders through Consultation Paper 371. The extension approvals were granted by Stephen Jones, assistant treasurer, and minister for financial services, following the submission of ASIC’s report and recommendations.
For more details, refer to the following downloads:
- ASIC Corporations (Product Intervention Order Extension – Short Term Credit) Instrument 2023/956
- ASIC Corporations (Product Intervention Order Extension – Short Term Credit) Instrument 2023/956 Explanatory Statement
- ASIC Corporations (Product Intervention Order Extension – Continuing Credit Contracts) Instrument 2023/957
- ASIC Corporations (Product Intervention Order Extension – Continuing Credit Contracts) Instrument 2023/957 Explanatory Statement
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