ASIC has today released Consultation Paper 371 Product intervention orders: Short term credit facilities and continuing credit contracts (CP 371) seeking feedback on proposals to extend both product intervention orders.

The current product intervention orders came into effect on Friday 15 July 2022. They reinforce consumer protections by prohibiting the provision of short term credit and continuing credit contracts, which involve unreasonably high fees charged to retail clients. These fees exceed the cost caps imposed by the National Credit Code.

If not extended, the short term credit and continuing credit contracts product intervention orders will expire on 15 January 2024.

CP 371 highlights ASIC’s analysis of the impact of the short term credit and continuing credit contracts product intervention orders. ASIC believes that the current orders have been effective in reducing the risk of significant detriment to retail clients resulting from the issuing of these products in conjunction with high cost services.

ASIC invites feedback on CP 371 until 5pm 31 August 2023.

ASIC will continue to monitor the short term credit and continuing credit contracts markets and will take regulatory action as appropriate.

Background

This consultation follows previous consultation and action by ASIC in relation to short term credit and continuing credit contracts.

On 9 December 2021, ASIC published Consultation Paper 355 Product intervention orders: Short term credit and continuing credit contracts (CP 355) on its proposals to make the short term credit product intervention order, and the continuing credit contracts product intervention order.

On 15 July 2022, ASIC made the short term credit and continuing credit contracts product intervention orders. ASIC found that these products had resulted in, and were likely to result in, significant detriment to retail clients, when the products were provided in conjunction with high cost services: 22-182MR.

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