ASIC targets payday lenders with new powers
The Australian Securities and Investments Commission (ASIC) has proposed the first use for its product intervention powers will be addressing significant consumer detriment in the short-term credit industry.
These powers would allow ASIC to intervene where financial and credit products had resulted in, or were likely to, result in significant consumer detriment. This particularly targeted a model where products provided consumers on low income or in financial difficulty with short-term credit at high costs.
One specific model used by two firms, Cigno Pty and Gold-Silver Standard Finance Pty, involved a short-term credit provider and associate who charged fees under separate contracts, which added up to around 990 per cent of the loan amount.
ASIC commissioner, Sean Hughes, said it had already received ‘many instances’ of these types of products affecting consumers.
“Sadly, we have already seen too many examples of significant harm affecting particularly vulnerable members of our community through the use of this short-term lending model. Consumers and representatives have brought many instances of the impacts of this type of lending model to us.
“Given we only recently received this additional power, then it is both timely and vital that we consult on our use of this tool to protect consumers from significant harms which arise from this type of product.”
ASIC said it would consult with affected and interested parties before exercising these product intervention powers and people would have until 30 July 2019 to submit their input via [email protected]
AUTHOR
Laura Dew
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
