ASIC has extended its product intervention orders made in relation to short term credit and continuing credit contracts so that the orders remain in force until they are revoked or they sunset on 1 October 2032.
The target market of these short term credit and continuing credit contracts included vulnerable retail clients who were in financial difficulty and required loans for basic living expenses (many of whom had been declined for regulated credit) and were charged significant fees in relation to the products.
Since the orders came into effect on 15 July 2022, they have reinforced consumer protections by preventing the provision of short term credit and continuing credit contracts that involve unreasonably high fees. These fees exceeded the cost caps imposed by the National Credit Code.
These orders have been effective in reducing the risk of significant harm resulting from these types of products.
ASIC deputy Chair Sarah Court said, 鈥楨xtending these product intervention orders ensures continued protection in the market against these high-cost lending products. Predatory lending practices targeting vulnerable consumers is an ongoing priority of ASIC, and we will continue to intervene to address this type of conduct.鈥�
Background
This follows previous consultation and action by ASIC in relation to short term credit and continuing credit contracts.
On 9 December 2021, ASIC published听Consultation Paper 355听Product intervention orders: Short term credit and continuing credit contracts听(CP 355) on its proposals to make the short term credit product intervention order, and the continuing credit contracts product intervention order.
On 15 July 2022, ASIC made the short term credit and continuing credit contracts product intervention orders. ASIC found that these products had resulted in, and were likely to result in, significant detriment to retail clients, when the products were provided in conjunction with high cost services:听22-182MR.
On 10 August 2023, ASIC released听Consultation Paper 371听Product intervention orders: Short term credit facilities and continuing credit contracts听(CP 371) seeking feedback on proposals to extend both product intervention orders.
The extension of both orders follows approvals provided by the Honourable Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, following submission of our report and recommendations.
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