ASIC's Comprehensive Review of Australia's Motor Vehicle Finance Sector

The review encompasses an assessment of lenders, brokers, and intermediaries to evaluate their adherence to responsible lending practices. Key areas of focus include loan default management, hardship practices, and dispute resolution processes. Initially, seven lenders are under scrutiny, with plans to extend the review to additional brokers and intermediaries as the project progresses.

ASIC has indicated that enforcement actions may be pursued if instances of misconduct are identified during the review. The regulator has emphasized its commitment to protecting consumers, particularly those in regional and remote areas, including First Nations communities, who may be more vulnerable to unfair lending practices.

This initiative follows ASIC's recent legal actions against car finance companies and dealerships for alleged breaches of responsible lending obligations and unlicensed car loans with excessive interest rates. These actions underscore the regulator's dedication to addressing misconduct within the sector.

The review also aligns with broader international scrutiny of car finance practices, such as the UK's Financial Conduct Authority's investigation into discretionary commission arrangements. These global efforts highlight the importance of regulatory oversight in protecting consumers from potential financial harm.

ASIC plans to publish initial findings in the latter half of 2025, followed by a comprehensive public report. This review is expected to lead to strengthened industry compliance, improved lending practices, and enhanced consumer protections within Australia's motor vehicle finance sector.