ASIC is warning credit providers and debt management firms that strong, targeted action against predatory lending, high-cost credit and misconduct impacting consumers experiencing financial difficulty is expected in the coming months as part of its continuing focus on protecting consumers.
The warning comes after ASIC’s Enforcement and regulatory update highlighted over $30 million in civil penalties secured by ASIC, as well as the commencement and finalisation of court proceedings against credit providers in the first quarter of 2023.
ASIC Deputy Chair Sarah Court said ASIC continues to sharpen its focus on credit providers and debt management firms, including those who are unlicensed or ‘fringe’ entities.
‘Credit providers and debt management firms that look to take advantage of vulnerable consumers are in our sights and we expect further action in the coming months against operators in this area,’ said Ms Court.
‘ASIC’s enforcement action against predatory lending is not limited to court action. We will continue to use our full suite of powers to protect consumers looking to access credit. This could be via a stop order for breaching the financial product design and distribution requirements or could be warning the company directly via our monitoring and surveillance programs.
‘In the first quarter of 2023, ClearLoans was ordered to pay more than $6m in penalties for failing to act efficiently, honestly and fairly when dealing with debtors in financial hardship as well as other misconduct.
‘ASIC also took action against credit provider Green County and issued stop orders on several credit products, including a credit for rent product.’
Key enforcement outcomes for the quarter
In February 2023, ASIC launched its first court proceedings in relation to alleged greenwashing conduct, suing Mercer Superannuation (Australia) Limited for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
These proceedings follow the issuing of over $140,000 in infringement notices in the past six months in response to concerns about alleged greenwashing.
ASIC was also successful in its case against ANZ Banking Group for breaching the National Credit Act with the bank receiving a $10 million penalty over its Home Loan Introducer Program.
ASIC also secured a $15 million penalty against GetSwift – the largest penalty levied to date against a company for breaching its continuous disclosure obligations.
ASIC took further steps to address disclosure and governance failures, commencing court proceedings against two major companies, TerraCom and the former Freedom Foods Group.
ASIC’s case against TerraCom marks the first time ASIC has taken action alleging breaches of whistleblower protection laws.
‘The enforcement outcomes of the last quarter reflect that we will not hesitate to take swift action where we see misconduct that harms consumers or undermines market integrity. Where appropriate, we will also test new areas of the law, as we are doing with our greenwashing and whistleblower cases,’ said Ms Court.
Key regulatory updates
ASIC has also provided guidance to the industry to help them better comply with their obligations and deliver better outcomes for consumers.
In February, ASIC published its Indigenous Financial Services Framework to support positive financial outcomes for First Nations people.
The first quarter of 2023 also saw ASIC deliver its final update on compensation for consumers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice. Six of Australia’s largest banks and financial institutions paid or offered a total of over $4.7 billion to impacted customers over eight years that ASIC monitored the remediation programs.