ASIC Calls for Improved Consumer Safeguards in Car Finance Sector

ASIC's findings indicate that some lenders have been imposing exorbitant establishment fees, with instances of fees reaching up to $9,000 on a $49,000 loan. Such practices have raised concerns about responsible lending and the financial burden placed on borrowers.

In light of these findings, ASIC has issued tailored action letters to eight lenders involved in the review, recommending improvements in areas such as staff training, risk management, hardship processes, and governance frameworks. The regulator has emphasized the need for lenders to enhance their oversight of intermediaries, including brokers and dealerships, to ensure fair and transparent practices.

ASIC Commissioner Alan Kirkland stated, "We saw instances of loan establishment fees as high as $9,000 on a loan of $49,000." He further highlighted the importance of addressing these issues to protect consumers from unfair financial practices.

Consumers are advised to remain vigilant when seeking car finance, carefully reviewing loan terms and fees, and considering multiple options to secure the most favorable terms. The full findings of ASIC's review are expected to be published in 2026, providing further insights into the sector's practices and the steps being taken to improve consumer outcomes.