media release (24-216MR)

ASIC issues DDO stop order against Northern Territory business over concerns of financial harm to First Nations consumers

Published

ASIC has made an interim stop order preventing Indy-C-Fashion Accessories Pty Ltd (Indy-C) from having consumers at its retail store in Katherine enter credit arrangements to pay for goods on credit through Centrepay deductions.

ASIC is concerned that consumers living in Katherine and surrounding remote areas, who receive low-incomes through Centrelink benefits are entering credit arrangements with Indy-C when they may be financially vulnerable, without access to other forms of credit. ASIC is concerned these consumers are at increased risk of financial hardship.

Consumers’ repayments to Indy-C for clothing and homewares purchased on credit are deducted from their Centrelink income before they receive their support payment. This carries the risk that they will then be unable to meet essential living expenses. ASIC is concerned that Indy-C does not assess consumers' needs, objectives or financial capacity before the credit facility is distributed to them.

ASIC is working with financial counsellors in Katherine to understand the breadth of this issue, and the circumstances of consumers experiencing financial difficulty and significant harm as a consequence of Indy-C. For the avoidance of doubt, ASIC does not allege that any customer has suffered loss as a result of Indy-C’s failure to comply with the target market determination requirements.* Protecting First Nations consumers from harm and misconduct remains an ASIC priority.

ASIC considers the nature of Indy-C’s business and its reliance on this Centrepay credit arrangement means it must comply with the design and distribution obligations (DDOs) administered by ASIC.

The DDOs require firms to design financial products that meet the needs of consumers in an identified target market and distribute the products in a targeted manner. Indy-C is therefore required to have a Target Market Determination (TMD) for the credit arrangement it offers to consumers, which involves the consumer repaying the cost of goods purchased through Centrepay deductions.

Indy-C does not have a TMD setting out, among other things, the details of the target market that it intends to distribute its credit arrangements within, and distribution conditions that would make it likely consumers are in the target market. ASIC put Indy-C on notice of this requirement in December 2023, and it has not made a TMD.

The interim stop order is valid for 21 days unless revoked earlier. The order does not prevent Indy-C from continuing to offer alternate payment options for goods such as cash or EFTPOS. Indy-C will have an opportunity to make submissions before a decision is made about a final stop order.

Background

ASIC has received complaints through consumer networks and engagements with ASIC’s Indigenous Outreach Program, suggesting that deductions paid to Indy-C may be detrimental to those consumers’ financial situation.

ASIC's Indigenous Outreach Program works across ASIC to provide advice, insights and support to ensure ASIC’s engagement with First Nations peoples is culturally appropriate and sensitive. The team works with a range of organisations and government agencies, including the financial services industry, to influence system change and drive positive financial outcomes for First Nations peoples.

First Nations consumers can contact ASIC’s Indigenous Outreach Program on our dedicated Indigenous Helpline on 1300 365 957.

Mob Strong Debt Helpline on 1800 808 488 can assist if you are experiencing financial hardship.

ASIC’s Moneysmart website has further information on managing money for First Nations consumers.

 

Editor’s Note 1:

*A previous version of the media release did not include this sentence. It was updated on 15 October 2024.

Editor's Note 2:

During a hearing on 16 October 2024, ASIC made a further interim stop order prohibiting the same conduct covered by the initial interim order.

ASIC will further consider submissions made by Indy-C during and after the hearing to determine whether the indefinite interim stop order remains in place.