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ASIC proposes censure on credit product

The corporate regulator has proposed to use its product intervention powers to address “significant detriment” caused by continuing credit products.

The Australian Securities and Investments Commission (ASIC) has issued consultation paper 330 (CP330), detailing a proposal to use its product intervention power to address concerns identified in the continuing credit industry.

Under Section 204 of the National Credit Code, continuing credit contracts refer to credit facilities in which:

  • multiple advances of credit are contemplated; and
  • the amount of available credit ordinarily increases as the amount of credit is reduced.

ASIC has claimed that it has identified issues relating to the provision of continuing credit, which have caused “significant detriment” due to borrowers incurring “very high cost, relative to the loan amount”.

The regulator added that it’s concerned that the products are “being issued to vulnerable clients, including many who are already in financial difficulty”.


ASIC stated that it is aware of two firms currently engaging in “concerning conduct” but noted that its proposed product intervention order would apply to any business engaging in such activities.

Following the release of the consultation paper, ASIC commissioner Sean Hughes commented: “We have continued to see concerning cases of significant harm affecting vulnerable members of the community through the distribution of continuing credit products.

“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.”

Consultation on ASIC’s proposal closes on Thursday, 6 August 2020. 

According to ASIC, concerns relating to continuing credit contracts were identified during its investigation of short-term lending.


In September, ASIC used its product intervention powers to ban a model of lending in the short-term credit industry, which has been found to cause significant consumer detriment.

ASIC had found that a credit provider and its associate charged “significant” upfront, ongoing and default related fees under a separate contract for management and administrative services in relation to the loan.

[Related: ASIC bands short-term lending model]

ASIC proposes censure on credit product

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