In releasing its latest consultation paper, ASIC cited continuing credit products being issued to borrowers as something that has resulted in significant detriment.
It was concerned that the continuing credit products are likely to result in significant detriment due to borrowers incurring very high cost, relative to the loan amount.
Further, it was worried that continuing credit products are being issued to vulnerable clients, including many who are already in financial difficulty.
ASIC said it is aware of two firms currently engaging in such conduct, and that it would apply the proposed product intervention order to any business engaging in that conduct.
The product intervention power allows ASIC to intervene where financial and credit products have resulted in, or will or are likely to result in, significant detriment, with all intervention orders required to be published on ASIC’s website and a public notice issued.
The latest proposed intervention follows a previous order ASIC made in September 2019 which banned the provision of short-term credit products unless specified conditions were complied with in relation to fees and charges.
“We have continued to see concerning cases of significant harm affecting vulnerable members of the community through the distribution of continuing credit products,” said ASIC commissioner Sean Hughes.
“The product intervention power equips ASIC with the ability to take action where we find significant consumer detriment. Protecting vulnerable consumers remains a high priority for ASIC.”
ASIC encouraged affected and interested parties to provide any comment and further information before it decides whether or not to make the product intervention order.