ASIC has car finance brokers in its sights

Speaking at ASIC’s Annual Forum 2023 yesterday, ASIC deputy chair Sarah Court stated that one of its new enforcement priorities for 2024 would be “the provision of used car finance to vulnerable consumers, which includes misconduct by brokers, car dealers and finance companies”.

She added that compliance with financial hardship obligations would also be an enforcement priority for 2024, following “the action [it] took against Westpac earlier this year” after the major lender failed to process 229 hardship applications within the required time frame.

Ms Court stated: “This is because we recognise the continuing pressure on consumers in response to cost-of-living pressures.

“And in a roundtable with consumer advocates just last week, ASIC commissioners heard firsthand of the growing demand for financial counselling services and the poor approach of some lenders to engagement with consumers in hardship.”

ASIC has also listed compliance with the reportable situation regime as one of its 2024 enforcement priorities.

The reportable situations regime was implemented as a key part of the financial services regulatory structure with reports by licensees a “critical source of regulatory intelligence”, with the obligations arising from the banking royal commission to allow for early detection of non-compliant behaviour.

Ms Court commented: “Our work in this area suggests that compliance with the new regime is low – with a disappointing 89 per cent of licensees not reporting against this regime at all.

“These reporting rates suggest we need a stronger approach to compliance in this area and we have recently commenced a targeted surveillance of those licensees who are not reporting to us as we would expect.”

ASIC’s deputy chair also stated that conduct impacting small businesses – including small-business creditors – would also be an enforcement priority next year, as 96 per cent of all Australian companies registered with ASIC are small businesses.

She added: “These businesses face distinct issues and challenges in the current economic climate and ASIC undertakes a range of activities to assist, engage and protect small business from harm.

“This year, we propose to focus on misconduct by financial services and credit providers who engage in misconduct in their dealings with small business, including unlawful credit activity, unfair contract terms and insurance claims handling misconduct.”

ASIC’s complete list of enforcement priorities for 2024 were:

• Enforcement action targeting poor distribution of financial products.
• Misleading conduct in relation to sustainable finance including greenwashing.
• High-cost credit and predatory lending practices to consumers and small business.
• Member services failures in the superannuation sector.
• Misconduct resulting in systemic erosion of superannuation balances.
• Insurance claims handling.
• Compliance with the reportable situation regime.
• Conduct impacting small business including small-business creditors.
• Enforcement action targeting gatekeepers facilitating misconduct.
• Misconduct relating to used car financing to vulnerable consumers including brokers, car dealers and finance companies.
• Compliance with financial hardship obligations.
• Technology and operational resilience for market participants.

Ms Court also revealed the enduring priorities the body had identified for the coming year, including:

• Misconduct damaging market integrity – including insider trading, continuous disclosure breaches and market manipulation.
• Misconduct impacting First Nations people.
• Misconduct involving a high risk of significant consumer harm – particularly conduct targeting financially vulnerable consumers.
• Systemic compliance failures by large financial institutions – resulting in widespread consumer harm.
• New or emerging conduct risks within the financial system.
• Governance and directors’ duties failures.

[Related: Westpac faces court over alleged failures in processing hardship notices]