ASIC has announced that its current review of Australia’s motor vehicle finance sector has exposed cracks in some lenders’ oversight of car finance distributors, revealing problematic sales tactics, and a lack of regular audits and checks by lenders.
ASIC said that most lenders examined by ASIC rely on intermediaries, such as brokers and dealerships, to arrange motor vehicle finance, with ASIC uncovering significant variations in loan establishment costs.
ASIC has issued tailored action letters to participating lenders based on its preliminary findings, with specific recommendations for each. The range of identified areas for improvement includes:
- Better training, accreditation processes and oversight of lenders’ finance distribution channels;
- Stronger product review triggers and risk frameworks using consumer harm indicators and available data, including internal and external dispute resolution data, to ensure products reach the right target market;
- Improved communication when financial hardship arrangements are in place (in line with ASIC’s recent hardship report), including better information on voluntary surrender options; and
- Enhanced governance frameworks to ensure adequate oversight of intermediary brokers and dealers.
Misconduct in used car finance sold to vulnerable consumers remains a key enforcement priority for ASIC.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
