Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), is intensifying its scrutiny of questionable debt management practices following alarming reports of misconduct targeting at-risk customers. Among the troubling incidents is the case of a woman who, without any clear justification, was advised to declare bankruptcy by her debt management service.
ASIC has confirmed it will conduct a review of the debt management and credit repair industry to enhance protections for consumers facing financial difficulties. The regulator has been alerted to several disturbing accounts of unfair and illegal actions perpetrated by licensed debt managers.
ASIC Commissioner Alan Kirkland highlighted the seriousness of the situation, sharing that one woman could not ascertain why her debt management firm had ceased payments to her creditors. After making numerous inquiries, she received unsolicited advice to go bankrupt, with little explanation provided. In another case, an individual risked losing his vehicle due to his debt management company’s neglect in responding to default notices from creditors. Upon attempting to terminate his contract and request a partial refund, he was informed of a strict no-refund policy.
The upcoming investigation will assess compliance within the sector, particularly in relation to the licensing scheme instituted in 2021, aimed at ensuring accountability among debt managers. ASIC plans to publish its findings in the next year, aiming to establish stronger safeguards for consumers vulnerable to financial exploitation.