ASIC has made product intervention orders by way of legislative instruments imposing conditions on the issuing of short term credit and continuing credit contracts to retail clients.
Today's release follows ASIC's public consultation through Consultation paper 355: Product intervention orders: Short term credit and continuing credit contracts (CP 355) which outlined ASIC proposals to make these orders.
ASIC's orders, which come into force on Friday 15 July 2022, reinforce consumer protections by prohibiting the provision of short term credit and continuing credit contracts which involve unreasonably high fees charged to retail clients, in excess of the cost caps in the relevant exemptions in subsections 6(1) and 6(5) of the National Credit Code (Code).
ASIC Commissioner Sean Hughes said 'ASIC identified significant detriment and harm especially to vulnerable consumers. ASIC has again exercised its powers to prevent borrowers being charged excessive fees to obtain these products.
These intervention orders will protect retail clients from predatory lending practices, and to prevent credit providers charging unreasonable fees in relation to small amounts of credit. This remains an area of concern for ASIC and will remain a priority especially as credit conditions tighten.'
ASIC continues to monitor the short term credit and continuing credit contracts markets and will take further regulatory and enforcement action as necessary, to address the risk of significant detriment and harm arising from the design and operation of these or similar products.
