ASIC has used its product intervention power for the first time to prohibit from 14 September 2019 companies, and directors of those companies, from using a specific short term lending model that ASIC considers has resulted in, will result or is likely to result in significant detriment to retail clients.
ASIC Corporations (Product Intervention Order—Short Term Credit) Instrument 2019/917 prohibits the provision of short term credit except in accordance with conditions which limit the total fees that can be charged. Background.
A short term credit provider (as defined by subsection 6(1) of the National Credit Code) must not provide credit to a retail client under a short term credit facility except in accordance with the condition that the total of:
(a) the amount of credit fees and charges that may be imposed or provided for under the short term credit facility; and
(b) the amount of collateral fees and charges that may be imposed or provided for under a collateral contract;
must not exceed the maximum amount of credit fees and charges permitted under subsection 6(1) of the National Credit Code in relation to the provision of credit under the short term credit facility.