The Australian Securities and Investments Commission (ASIC) has launched a consultation on a second product intervention order to stop continuing consumer harm.
The product intervention power allowed the regulator to address significant detriment identified in the continuing credit industry, which often affected vulnerable clients and those in financial difficulty.
This proposed intervention would follow the product intervention order that ASIC made in September 2019, which banned the provision of a class of financial products, namely short-term credit products, unless specified conditions were complied with in relation to fees and charges.
The regulator said that during monitoring the effects of the short-term credit intervention, it had identified another class of financial products, namely continuing credit products, being issued to borrowers.
While ASIC was aware of two firms currently engaging in the concerning conduct, the proposed product intervention order would apply to any business engaging in the concerning conduct, it said.
Announcing the consultation, ASIC Commissioner Sean Hughes, added: “We have 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. Protecting vulnerable consumers remains a high priority for ASIC.”
ASIC would seek the public’s input on the proposed intervention order by Thursday 6 August 2020.