ASIC Investigates Car Finance Practices to Strengthen Consumer Safeguards

ASIC's review encompasses the practices of lenders, brokers, and intermediaries involved in car financing. Key areas of examination include loan default management, hardship practices, and dispute resolution processes. The regulator has identified significant concerns, such as instances where consumers defaulted on car loans within the first six months, and cases where loan establishment fees reached as high as $9,000 on a $49,000 loan.

In response to these findings, ASIC has issued tailored action letters to participating lenders, recommending improvements in staff training, risk management, hardship processes, and governance frameworks. The regulator has also indicated that enforcement actions may be pursued where misconduct is identified.

For consumers, this review underscores the importance of understanding loan terms and conditions thoroughly. Prospective borrowers are advised to seek transparent information from lenders and to be cautious of loans that may not align with their financial capacity.

ASIC plans to publish initial findings in the second half of 2025, followed by a more detailed public report. This ongoing scrutiny aims to foster a more transparent and fair car finance market, ultimately benefiting Australian consumers.