ASIC has published a report on its review of eight lenders from the motor vehicle finance (car loans) sector.
It focused on consumer outcomes, including for consumers in regional and remote locations and First Nations consumers. It found significant indicators of consumer harm.
ASIC’s recommendations included that the lenders should:
* better articulate their products, including key features and respective target markets via published target market determinations (TMDs);
* address problematic sales practices (e.g. high-pressure sales tactics and overriding consumer objections to certain types of finance);
* implement better governance frameworks to ensure adequate oversight of intermediary brokers and dealers;
* improve distribution conditions, given the market’s overwhelming reliance on distributors, including outlining how lenders will monitor compliance with those conditions;
* develop stronger product review triggers and risk frameworks, including using available harm indicators and internal data to ensure their products reach the right target market; and
* improve hardship policies and practices, such as enhanced communications on voluntary surrender and time‑to‑sell arrangements, so consumers can be aware of these options.
Legislative obligations which apply to car loans include:
* the National Consumer Credit Protection Act 2009 which applies to consumer credit, such as secured car loans: and
* the design and distribution obligations within the Corporations Act 2001, which require financial service product issuers, such as lenders and relevant product distributors, to take a consumer-centric approach to the design and distribution of financial products, along with stated conditions for distribution and triggers for product review.
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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.
