The Australian Securities & Investment Commission (ASIC) has released a consultation paper on a proposed crackdown for the continuing credit industry.
ASIC hopes to make use of its product intervention power to protect vulnerable Australians who get caught up with the industry and suffer as a result.
ASIC’s proposed intervention follows a product intervention order it made in September 2019, banning the provision of short term credit products, unless specified conditions were complied with relating to fees and charges.
The Commission said that when monitoring the effect of the short term credit intervention it identified another class of financial products – continuing credit products – being issued to borrowers.
“ASIC is concerned that the continuing credit products are likely to result in significant detriment due to borrowers incurring very high cost, relative to the loan amount,” it said.
“ASIC is also concerned that continuing credit products are being issued to vulnerable clients, including many who are already in financial difficulty.”
ASIC Commissioner Sean Hughes said the Commission continued to see concerning cases of significant harm affecting vulnerable members of the community through the distribution of continuing credit products.
“The product intervention power equips ASIC with the ability to take action where we find significant consumer detriment,” Mr Hughes said.
“Protecting vulnerable consumers remains a high priority for ASIC,” he said.
Mr Hughes said submissions on the consultation paper would be accepted until 6 August.
Further information, including how to have a say can be accessed at this PS News link.
