ASIC has warned credit providers and debt management firms that it will spend the coming months taking strong, targeted action against predatory lending, high-cost credit and misconduct affectiing consumers in financial difficulty.
The warning comes after a recently released enforcement and regulatory update highlighted over $30 million in civil penalties secured by ASIC, as well as the commencement and finalisation of court proceedings against credit providers in the first quarter of 2023.
ASIC’s enforcement actions for the quarter include launching its first court proceedings in relation to alleged greenwashing conduct from Mercer Superannuation (Australia) Limited.
ASIC alleged Mercer was making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. The proceedings follow the issuing of over $140,000 in infringement notices in the past six months in response to concerns about alleged greenwashing.
The financial services regulator was also successful in its case against ANZ Banking Group for breaching the National Credit Act. This resulted in ANZ receiving a $10m penalty over its Home Loan Introducer Program.
ASIC also secured a $15m penalty against GetSwift – the largest penalty levied to date against a company for breaching continuous disclosure obligations – and addressed disclosure and governance failures with court proceedings against TerraCom and the former Freedom Foods Group.
ASIC deputy chair Sarah Court (pictured above) said that ASIC was continuing to sharpen its focus on credit providers and debt management firms, including unlicensed or “fringe” entities.
“Credit providers and debt management firms that look to take advantage of vulnerable consumers are in our sights and we expect further action in the coming months against operators in this area,” Court said.
“ASIC’s enforcement action against predatory lending is not limited to court action. We will continue to use our full suite of powers to protect consumers looking to access credit.”
Court said this could include a stop order for breaching the financial product design and distribution requirements, or a warning to the company directly via monitoring and surveillance programs.
“In the first quarter of 2023, ClearLoans was ordered to pay more than $6m in penalties for failing to act efficiently, honestly and fairly when dealing with debtors in financial hardship as well as other misconduct,” she said.
“ASIC also took action against credit provider Green County and issued stop orders on several credit products, including a credit for rent product.’
ASIC said its case against TerraCom marked the first time the regulator had taken action alleging breaches of whistleblower protection laws.
“The enforcement outcomes of the last quarter reflect that we will not hesitate to take swift action where we see misconduct that harms consumers or undermines market integrity. Where appropriate, we will also test new areas of the law, as we are doing with our greenwashing and whistleblower cases,” said Court.
ASIC said that, in addition to enforcement action, it was providing guidance to the industry to help companies better comply with their obligations and deliver better outcomes for consumers.
Meanwhile, ASIC published its Indigenous Financial Services Framework in February to support positive financial outcomes for First Nations people.
ASIC also provided a final update on compensation for consumers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice. ASIC said six of Australia’s largest banks and financial institutions paid or offered a total of over $4.7bn to affected customers over the eight years that ASIC monitored the remediation programs.