CCLS welcomed the opportunity to contribute to a joint submission responding to the Australian Securities and Investments Commission’s (ASIC) Consultation paper 371 – Product intervention orders: Short term credit facilities and continuing credit contracts (CP 371).
This is a joint submission made on behalf of Consumer Action Law Centre, Financial Rights Legal Centre, Financial Counselling Australia, Indigenous Consumer Assistance Network, WEstjustice, The Salvation Army, Consumer Credit Legal Service WA, Victorian Aboriginal Legal Service and Redfern Legal Centre.
We support and agree with the Australian Securities and Investment Commission’s (ASIC) findings and recommendations in CP 371, including the proposal to extend the following product intervention orders (PIOs) made by ASIC under the Corporations Act 2001 (Corporations Act) in relation to credit facilities, so that they remain in force until they are revoked or sunset on 1 October 2032:
• Short term credit order – ASIC Corporations (Product Intervention Order – Short Term Credit) Instrument 2022/647 that applies to short term credit facilities and associated collateral contracts used in the arrangements described in paragraph 19 of CP 371 (Short Term Credit Model, or STCM); and
• Continuing credit contracts order – ASIC Corporations (Product Intervention Order – Continuing Credit Contracts) Instrument 2022/648 that applies to continuing credit contracts and associated collateral contracts used in the arrangements described in paragraph 60 of CP 371 (Continuing Credit Contract Model, or CCCM).
There have been a total of three PIOs created by ASIC prohibiting these credit models. The first PIO1 (2019 STCM PIO) applied to the STCM. It commenced on 14 September 2019 and expired on 14 March 2021. Extending the operation of the 2022 PIOs, listed above, is the best way that ASIC can ensure the harmful effects of these credit models remain prohibited and will disincentivise the risk of similar harmful models re-emerging in the future.
To read a copy of the submission, click here.