On 13 November 2024, ASIC Deputy Chair Sarah Court delivered an address at the Australian Financial Security Authority Summit. In her remarks, she highlighted ASIC’s commitment to supporting confidence in the Australian credit system, with an emphasis on protecting financially vulnerable consumers from predatory practices and unfair outcomes. Court underscored ASIC’s regulatory focus on compliance within the credit sector and explained how ASIC’s targeted interventions, particularly in financial hardship cases, serve as key mechanisms to protect consumer interests.
ASIC holds a central role in promoting integrity and fair outcomes in the Australian credit system. Its regulatory mandate includes overseeing entities within the consumer credit sector, with the goal of encouraging compliance and accountability across the industry. ASIC accomplishes this by promoting a culture of adherence to the Australian regulatory framework, including compliance with the National Consumer Credit Protection Act 2009 (Cth) and other applicable statutes. This approach seeks to ensure that consumer rights are protected, particularly when companies attempt to circumvent obligations under Australian law. Court noted that ASIC’s role as a steward of the Australian credit system relies on identifying significant sources of consumer harm and addressing them through regulatory oversight, industry guidance, and, where necessary, enforcement action.
In mid-2023, ASIC began receiving indicators of rising financial hardship among Australian consumers, alongside preliminary evidence that several large lenders were not meeting their legal obligations to consumers in distress. In response, ASIC initiated a multi-step engagement with the credit industry to assess and enhance compliance with financial hardship requirements under Australian law.
In August 2023, ASIC issued an open letter to Australian lenders, reiterating its expectations for compliance with hardship obligations. Subsequently, ASIC conducted a comprehensive data collection effort, involving over 900,000 hardship notices from 30 lenders covering approximately half a million credit accounts over two years. To deepen its review, ASIC focused on 10 specific home lenders, analysing data, reviewing individual case studies, and conducting site visits. This scrutiny revealed that many lenders were not adequately informing consumers of their hardship options, and, in some instances, were failing to recognise consumer requests for hardship assistance altogether. The review’s findings were published in ASIC’s May 2024 report, ‘Hardship, hard to get help: Lenders fall short in financial hardship support’ (REP 783), which identified critical deficiencies in how lenders manage hardship notices.
Following the report, ASIC required each reviewed lender to develop and submit an action plan for addressing these deficiencies. ASIC continues to monitor these entities and may pursue further regulatory actions if it detects ongoing issues with consumer hardship support. Concurrent with this initiative, ASIC launched the Just Ask campaign on its Moneysmart platform to empower consumers by raising awareness of their rights regarding hardship notifications.
ASIC also initiated civil proceedings in September 2023 against Westpac in the Australian Federal Court, alleging that the bank had failed to respond to multiple customer hardship notices within the timeframe required under Australian law. This action underscores ASIC’s determination to enforce hardship obligations where non-compliance adversely impacts consumers.
Court expanded on ASIC’s enforcement strategy, describing it as a tool to both remedy specific instances of misconduct and signal broader deterrence across the credit industry. ASIC annually announces its enforcement priorities, and Court confirmed that as long as consumer harm remains evident in the credit sector, it will remain a key focus. ASIC is particularly vigilant against business models that circumvent consumer protections, with several court cases underway to address such conduct.
Among the recent cases is one against Oak Capital, which ASIC alleges engaged in systemic unconscionable conduct by structuring loans to avoid consumer protections under Australian law. In this case, Oak Capital allegedly required borrowers to structure loans as business loans, despite being personally secured by consumers’ homes, thereby bypassing hardship rights and responsible lending obligations afforded under Australian law.
Another significant case involves Rent4Keeps, where ASIC prevailed in Federal Court, establishing that the company’s “consumer lease” arrangements—designed to fall outside credit regulation—were in fact credit contracts subject to the National Consumer Credit Protection Act 2009 (Cth). This finding exposed Rent4Keeps’ consumers to inflated charges, in violation of legal interest rate caps and protections that ASIC argued should have applied.
ASIC’s recent enforcement action extends to unlicensed lending by car dealerships and misconduct by debt management firms. Another notable case was ASIC’s successful action against Harvey Norman and Latitude Finance Australia, where the court found misleading conduct related to advertising for a 60-month interest-free option, which masked the fact that consumers were obligated to sign up for credit cards and incur additional fees.
In conclusion, Court articulated that the ultimate aim of ASIC’s efforts is to foster confidence in the Australian credit system. Instances of consumer harm, including unreasonably high debt or hidden fees, not only damage individual trust but also diminish confidence in the system as a whole. Court emphasised the importance of a culture of compliance, noting that it is far more sustainable—and beneficial to the industry and consumers alike—than remediation after the fact.
ASIC’s ongoing collaboration with other Australian regulators, such as AFSA, APRA, and the ATO, is integral to creating a resilient credit system that meets community expectations. Court’s address reflects ASIC’s commitment to supporting a fair, transparent, and accountable credit environment, positioning consumer protection as a central tenet of ASIC’s regulatory approach.
