Powered by MOMENTUM MEDIA
subscribe to our newsletter
Lessons learned from an ASIC review

Lessons learned from an ASIC review

ASIC recently conducted a review into my company’s flexi-loan product which provided me with some valuable lessons about dealing with the corporate regulator.

I’ve built Fair Go Finance from the ground up since 2008 and we pride ourselves on being a responsible lender, committed to giving our customers access to a brighter financial future. To see our culture called into question was hard to swallow for my staff and I.

While we were disappointed with ASIC’s media statement, I’m not going to have a go at the umpire. We respect their role in enforcing trust and transparency in the financial sector.

Advertisement
Advertisement

Our negotiation strategy was pretty straightforward – we viewed this as part of a long-term relationship with ASIC, and our objectives were to adapt where needed and to minimise any impact on our reputation and finances.

Having gone through this review, I believe the lessons I learned may give others an insight into working with ASIC.

Lesson #1: ASIC’s perception is (almost) reality

In looking for systemic issues – and with a track record of success in an area – ASIC is likely to look at other businesses they perceive to be similar.

In our case, there were other lenders in the same industry who had previously offered similar products, but with different obligations to the customer.

These variations are lost on a budget and resource-stretched ASIC who views industries in broad terms.

Lesson #2: The path of least resistance is still not easy

ASIC’s review of Fair Go Finance started in March 2015 and was resolved in January 2016. To get to this resolution, there were notices, meetings, responses to notices, letters, data extracts, paper files, training manuals, procedure documents, review periods, further notices, further requests and clarifications.

In a relatively small organisation of 30 staff that is trying to meet customer expectations plus stay on top of other compliance matters, the interruption this process delivered to the business, as well as the impact on staff morale, is not to be underestimated.

Lesson #3: When talking French, it helps if you are from France

Good advice is important and it pays to have someone on your side to help steer you through unchartered terrain. We had a former ASIC staff member on the team and this helped us understand ASIC’s position and concerns, and the options that were available.

Lesson #4: ASIC does listen

It's often said about negotiations that if both parties are unhappy (but can live with it), a fair outcome is likely to have been reached. ASIC acknowledged the efforts we undertook to comply with their requests, and the costs that were borne by the business in doing this quickly. In doing so, we reached an outcome that was in line with our objectives.

What to do if ASIC takes action

What should you do if ASIC come knocking? I can only speak from having been through this once, but by getting good advice, we were able to move through the process in a reasonable time frame. While we are financially worse off in the short term, we are now in a stronger position to grow.

As a small business with big ambitions, fighting the regulator did not make strategic sense. We can now continue to build a business that fills a gap in the market, working with our partners to provide a product our customers enjoy the benefits of.

Lessons learned from an ASIC review
Paul Walshe
mortgagebusiness

Paul Walshe

Paul Walshe is the managing director of Fair Go Finance, providing personal loans to everyday Australians and a dedicated service to brokers.

As a current board member of the National Credit Providers Association, Paul is committed to establishing understanding and acceptance of the micro-lending industry in Australia.

 

Latest News

APRA’s proposal to loosen serviceability measures could reignite the credit boom, Moody’s has said, amid growing expectations that the m...

The median time on market for a residential dwelling has almost doubled, reflecting subdued demand for housing amid falling property prices,...

NAB and Westpac are among the 56 banks to endorse the United Nations’ Principles for Responsible Banking that will be launched in Septembe...

FROM THE WEB
podcast

LATEST PODCAST: How the mortgage sector will be impacted by the federal election

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.