ASIC is seeking further feedback on its proposed use of its product intervention powers to address significant detriment in relation to continuing credit contracts.
Today’s release follows ASIC’s earlier consultation through Consultation Paper 330 Using the product intervention power: Continuing credit contracts (CP 330) which was published on 9 July 2020.
CP 330 outlined ASIC’s proposal to make an industry wide product intervention order to address concerns of ongoing significant detriment in relation to continuing credit contracts, which involve unreasonably high costs, in excess of the cost caps in the continuing credit exemption in s6(5) of the National Credit Code.
The consultation process
In response to submissions received to CP 330, ASIC has made changes to the proposed product intervention order. These changes involve providing certain exclusions for Buy Now Pay Later arrangements, and for fees charged by licensed providers of non-cash payment facilities that are associated with continuing credit providers.
These changes are set out in detail in the attached addendum to CP 330 and updated draft product intervention order.
ASIC invites stakeholder feedback on these changes. The feedback will help ASIC consider whether, and if so how, to exercise the product intervention power.
Comments should be sent by 24 November 2020 to: firstname.lastname@example.org.
- Addendum to CP 330
- Updated draft ASIC Corporations (Product Intervention – Continuing Credit Contracts) Instrument 2020/XXX
ASIC’s action in relation to the continuing credit market follows ASIC’s action in September 2019 in relation to the short term credit market. On 12 September 2019 ASIC made a product intervention order by way of legislative instrument in relation to short term credit: 19-250MR. The order came into force on 14 September 2019.
A judicial review application was filed on 20 September 2019 in the Federal Court of Australia by Cigno which sought to quash the short term credit order: 19-264MR. In April 2020 the Federal Court dismissed that application with costs awarded to ASIC: 20-089MR. In May 2020 an appeal was filed with the Federal Court of Australia with a hearing date set for 19 November 2020 before the Full Federal Court.