ASIC extends product intervention orders on high-cost credit contracts

The Australian Securities and Investments Commission (ASIC) has extended its product intervention orders about short-term credit and continuing credit contracts, ensuring their enforcement until revocation or the scheduled sunset on 1 October 2032.

Initially implemented on 15 July 2022, these orders targeted short-term and continuing credit contracts that adversely affected financially distressed retail clients. These individuals, often denied regulated credit, sought loans for basic living expenses and were subjected to exorbitant fees associated with the products.

The orders specifically aim to prevent the provision of short-term credit and continuing credit contracts laden with unreasonably high fees, surpassing the cost caps stipulated by the National Credit Code. Since their inception, these orders have played a pivotal role in fortifying consumer protections, curbing the prevalence of high-cost lending products and mitigating the risks of significant harm associated with such financial instruments.

Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, approved the extension of the orders.

ASIC Deputy Chair Sarah Court underscored the importance of the extended intervention, stating, "Extending these product intervention orders ensures continued protection in the market against these high-cost lending products. Predatory lending practices targeting vulnerable consumers is an ongoing priority of ASIC, and we will continue to intervene to address this type of conduct."

The regulatory action follows earlier initiatives by ASIC, including the publication of Consultation Paper 355 in 2021, addressing proposals for short-term credit and continuing credit contracts product intervention orders. Subsequently, in July 2022, ASIC officially implemented the orders after identifying substantial detriment to retail clients associated with high-cost services.

Further engagement with the industry and stakeholders occurred in August 2023 when ASIC released Consultation Paper 371, seeking feedback on proposals to extend both product intervention orders. The subsequent extension was granted following the submission of ASIC's report and recommendations.