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Media release: ASIC intervention in short term credit market applauded

Thursday, 12 September 2019

The Financial Rights Legal Centre (Financial Rights) has welcomed the Australian Securities and Investment Commission’s (ASIC’s) announcement that they will use their Product Intervention Power to address the short-term credit industry.

The new product intervention power allows ASIC to intervene where financial and credit products have resulted in or are likely to result in, significant consumer detriment.

Businesses such as Cigno Pty Ltd, Gold-Silver Standard Finance Pty Ltd, MyFi Australia Pty Ltd and BHF Solutions Pty Ltd provide short term credit using methods which purport to avoid pay day lending regulations, charging fees under separate contracts that can add up to exorbitant amounts.

“The business models of pay day lenders like Cigno and MyFi have been designed to avoid the law and exploit the most financially vulnerable people in Australia,” said Karen Cox, Chief Executive Officer of Financial Rights. “This is an important move by ASIC and we are glad to see this business model shut down.”

 “This ban will reduce the number of truly shocking examples of exploitation that we see at our centre – including people being charged ridiculous fees and owing up to 952% of the original amount borrowed.”

 “Intervention in this space is well overdue and we are pleased that ASIC has used this power on a well-deserved target.”

Contact


For further information contact Peter Vincent Communications and Campaigns Officer peter.vincent@financialrights.org.au on 02 8204 1372. Karen Cox, Chief Executive Officer of Financial Rights is available for further comment.

About Financial Rights

The Financial Rights Legal Centre is a community legal centre that specialises in helping consumers understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. We provide free and independent financial counselling, legal advice and representation to individuals about a broad range of financial issues. We operate the Insurance Law Service which provides advice nationally to consumers about insurance claims and debts to insurance companies. Financial Rights also operates the National Debt Helpline in NSW , assisting consumers experiencing financial difficulties. Financial Rights took over 25,000 calls for advice or assistance during the 2017/2018 financial year.

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