Improving protection for people who use credit

Key points

ASIC recognises the important role of credit within the financial system.
Consumer credit protections have been in place for many years and yet they are not universally enjoyed by people who seek or use credit.
ASIC regards consumer credit protection as a priority and will continue to use all the tools in its regulatory toolkit to address poor practices and serious misconduct.

Check against delivery

Thank you, Melynda, for the introduction. And thank you to AFIA for the invitation to speak to you today.

I would like to acknowledge the traditional owners of the land on which we meet, the Yugambeh people.

I pay my respects to their elders, past and present – and extend that respect to Aboriginal and Torres Strait Islander people here today.

The role of credit during economic hardship

When I addressed this summit just over a year ago, I spoke about how cost-of-living pressures were impacting Australians.

At the time, high inflation, high interest rates, and high rental prices were straining household budgets.

While the world has changed a lot in the past year, cost-of-living remains a challenge for many Australians.

It is true that headline inflation is trending down, and we have seen one cut in the cash rate, with further cuts widely expected.

But inflation in some areas of less discretionary expenditure remains elevated, with:

Rent inflation expected to persist throughout 2025
Energy prices expected to increase as subsidies come to an end, and
Continued pressure from the cost of some essential services like health.

In this context, access to credit is important.

Credit, where appropriately provided, gives people greater control over their lives, allowing them to select the timing of purchases without needing to accumulate savings in advance.

It can also help people to respond to unexpected events like injury or illness.

But it comes with risks.

And for that reason:

Lending needs to be fair.
It needs to take into account consumers’ needs and objectives.
It should not put consumers at risk of financial hardship, where that is foreseeable at the time of the loan.
When consumers find themselves struggling to repay a loan, lenders need to respond quickly to requests for hardship assistance.
And consumers should not be subject to unfair debt management or debt collection practices.

These observations are not novel. They simply reflect the consumer protections that have been in place for some years.

Yet based on ASIC’s work, these protections are not universally enjoyed by people who seek or use credit.

This afternoon I’d like to spend some time reflecting on ASIC’s current and upcoming work in relation to lending practices, financial hardship, and debt management and credit repair.

Predatory lending

Predatory lending is a constant theme in ASIC’s work, regardless of the economic circumstances – but it is a particular concern when people are finding it difficult to manage their household budgets.

We know that cost-of-living pressures create an environment in which more people are likely to become the target of, or fall victim to, predatory lending practices.

Even when inflation eases, many people are left with depleted savings and increased indebtedness.

That’s why our Corporate Plan includes a focus on predatory lending.

This is also reflected in our 2025 enforcement priorities, which include:

business models designed to avoid consumer credit protections; and
used car finance sold to vulnerable consumers by finance providers.

Our recent work in this area has included a review of how lenders are complying with the new regime for small amount credit contracts.

Our review found that some providers were falling short of their obligations by either:

entering into unsuitable contracts with consumers, or
failing to identify an appropriate target market and distribute their products accordingly.

We also flagged a concern that some businesses may be attempting to avoid the additional consumer protections imposed on small amount credit contracts.

We have warned lenders who have changed their product offerings following the reforms to consider their legal obligations – in particular the obligation to consider a consumer’s requirements and objectives before entering into a credit contract.

Another area of focus of our regulatory work has been motor vehicle finance for vulnerable consumers, including First Nations consumers living in regional and remote communities.

In response to repeated concerns reported to ASIC by First Nations advocates, financial counsellors and consumer organisations, we are undertaking a review of practices in this sector^[1].

This review will initially focus on a select group of lenders, but we expect it to expand to include brokers and intermediaries.

We anticipate publishing a public report on our findings later this year.

We also have several enforcement actions underway for lending failures in this area including proceedings against:

Diamond Wheels, Keo Automotive and a former director^[2] for allegedly providing unlicensed car loans to consumers, many of whom paid an excessive interest rate
Money3 Loans^[3] for allegedly failing to consider the financial circumstances of vulnerable consumers, including First Nations people, when providing car finance, resulting in customers entering into highly unsuitable loans
Swoosh Finance^[4] for alleged breaches of responsible lending and design and distribution obligations, and
Oak Capital^[5] for allegedly engaging in unconscionable conduct designed to avoid the National Credit Code.

We have also been successful in a number of recent enforcement actions including our actions against:

Green County^[6] which was found to have engaged in unlicensed credit activity and contravened consumer protections in the Credit Code
Rent4Keeps^[7], where the Federal Court found that the business breached the Credit Act by presenting lending arrangements as leases, meaning customers paid significantly more for items than they lawfully should have, and
Harvey Norman and Latitude^[8] where the Federal Court ruled they had engaged in misleading conduct and made false or misleading representations in relation to a widespread advertising campaign for a 60-month interest free loan and no deposit payment method.

While these actions have all been covered publicly, I am highlighting them to make two points:

Firstly: it’s extremely disappointing that we continue to receive so many reports of misconduct in relation to failures to comply with basic and longstanding consumer protection laws.
Secondly: ASIC sees consumer credit protection as a key priority and will continue to take enforcement action in response to serious misconduct. That includes taking action against individuals where appropriate.

Before leaving this topic, I would note that our work in relation to lending conduct also includes an interest in the role of mortgage brokers.

We recognise the continued growth in the role of brokers in home lending.

The latest data from the Mortgage and Finance Association of Australia^[9] indicates that around 75% of new residential mortgages are being facilitated by brokers, up from 67% in 2021^[10].

While this sector attracts a relatively low level of consumer complaints, we are conscious that misconduct by brokers will not always be obvious to their customers.

And our track record of regulatory action indicates that the sector is not immune from misconduct.

In the five years from July 2019 to December 2024, ASIC took regulatory action against a number of finance and mortgage brokers resulting in:

the cancellation of 22 credit licences and one licence suspension
the banning of 14 people from engaging in credit activities, and
criminal sentences being imposed on eleven individuals or companies.

I also note the action we have recently commenced against RAMS^[11] for what we allege to be systemic misconduct.

We continue to be interested in the conduct of brokers and are currently engaging with several large mortgage aggregators to gather data on patterns of lending involving brokers, which may inform further action by ASIC.

Financial hardship – hard to get help

The second area of concern that I flagged earlier was the financial hardship practices of lenders.

As you all know, last year ASIC released a significant report on financial hardship showing that lenders were failing customers at times when they most needed help.

Take the case of Sumit for example.

Sumit (not his real name) was a casual worker who after having his home loan for more than 18 years was experiencing a difficult period.

His work had been impacted by flooding, he had to take time off to care for his unwell mother and he was generally struggling to keep up with his mortgage repayments.

Over a period of six months, Sumit approached his lender six times to seek mortgage relief.

It was not until the sixth time that he was finally referred to the hardship team and approved for a three-month hardship arrangement.

We provided a number of similar case studies in our report.

A year on from our review, we are monitoring whether lenders are taking steps to improve, and as with our work on lending practices, we are reinforcing the importance of responding to people who seek hardship assistance through enforcement action.

We have taken action against Westpac^[12] and National Australia Bank^[13] for failing to respond to hardship applications within the required 21-day timeframe.

And more recently, we sued Resimac^[14] for imposing a ‘one-size-fits-all’ approach to hardship applications, requiring customers to provide extensive standard information without considering whether it was relevant or necessary to that customer’s individual circumstances.

The obligation for a lender to respond to a person who says that they are in financial hardship is not new.

It is unacceptable for lenders to fail to have the right systems, processes and training in place to comply with this obligation.

Debt management and credit repair

The final area of concern that I said I would speak about is debt management and credit repair services, which are also priorities in our regulatory work and reflected in our 2025 enforcement priorities.

We are aware of concerns among some credit providers that debt management firms may not always be acting in consumers’ best interests, particularly in financial hardship cases.

These concerns were canvassed in the Independent Review of Australia’s Credit Reporting Framework^[15], published in September last year.

This review noted broad agreement across industry, regulators and consumer groups that credit repair services are undermining the integrity of the credit reporting system and exploiting vulnerable consumers.

This observation is consistent with long-term concerns reported to ASIC by consumer advocates.

The review recommended that ASIC investigate the conduct of the credit repair industry to assess compliance with licence obligations and whether they are operating honestly and fairly with consumers.

We are currently looking at how we might respond to this recommendation for a review of credit repair businesses – or the broader debt management industry.

You should also expect to see us take a closer interest in the debt collection practices of firms regulated by ASIC.

Our enforcement work in these areas includes:

infringement notices totalling over $37,000 to debt management company Chapter Two Holdings^[16] for alleged misleading statements on its website
proceedings against Bakken Holdings^[17], an operator of the debt management business Solve My Debt Now, following concerns of substantial consumer harm, and
proceedings against Ultimate Credit Management^[18] for breaching consumer credit protection laws.

Our interest in these issues reflects an understanding that the customers of debt management firms and people subject to debt collection practices are some of the most financially vulnerable people in the system, so it is particularly important that they are treated fairly.

The broader operating environment

While these comments have focused on core obligations in the credit legislation, we recognise that you – like ASIC – are facing a range of external factors that impact the way you go about your business and engage with your customers.

These include in particular:

the rapid growth in the use and future potential of AI, and
growing cybersecurity threats.

Perhaps we can unpack these issues in more detail as part of the discussion but, briefly, our general guidance to licensees is that current laws that are longstanding and well understood provide valuable guidance to your responsibilities.

These include your obligations:

to do all things necessary to ensure that you engage in credit activities efficiently, honestly and fairly
to have adequate risk management systems
not to engage in conduct that is misleading or deceptive.

While the government has been consulting on law reform options, especially in relation to AI, our view is that in the absence of any reform, current laws applying to credit and to financial services more broadly provide useful protections to consumers.

There are also existing regulatory tools that ASIC can deploy in response to significant failures.

At this stage our approach to AI has focused on engaging with the firms we regulate to understand how they are using AI and how this use is being governed.

Some of our initial observations were reflected in our first ‘state of the market’ review of the use and adoption of AI by financial services licensees released last year.^[19]

In relation to cybersecurity, again, consumer protections exist.

You see this reflected in our enforcement action against FIIG Securities^[20] for allegedly failing to have adequate cybersecurity measures in place for more than four years, enabling the theft of approximately 385GB of confidential data, with some 18,000 clients notified that their personal information may have been compromised.

Closing

In closing, I want to note that all of ASIC’s work – the regulatory priorities that we identify, and the enforcement matters that we pursue – are guided by our vision, which is for a fair, strong and efficient financial system for all Australians.

We recognise the important role of credit within that financial system – and I recognise the role that the people in this room play in helping to ensure that credit is provided fairly and in line with the interests of consumers.

I thank you for your work and look forward to answering your questions.

Thank you.

[1] ASIC puts car finance under the microscope including outcomes for regional and First Nations consumers

[2] 24-209MR ASIC sues south-west Sydney car dealership for alleged unlicensed lending

[3] 23-126MR ASIC sues Money3 Loans for responsible lending breaches

[4] 24-285MR ASIC takes action against Swoosh alleging responsible lending failures and DDO breaches

[5] 24-243MR ASIC sues Oak Capital alleging unconscionable conduct designed to avoid the National Credit Code

[6] 25-060MR Federal Court finds Green County and Max Funding engaged in unlicensed lending practices

[7] 24-195MR ASIC wins against Rent4Keeps for overcharging vulnerable consumers on essential household goods

[8] 24-228MR Court rules Harvey Norman and Latitude advertising misled consumers

[9] Mortgage & Finance Association of Australia - 2025-Value-of-Mortgage-and-Finance-Broking-Report.pdf

[10] More than two in three home loans written by mortgage brokers - MFAA