In order to better protect consumers experiencing financial hardship, ASIC has announced that they will be launching a review into the debt management and credit repair sector. The debt management and credit repair industry was brought into the credit licensing regime in 2021, in an effort to protect consumers from predatory practices. Since then, ASIC has commenced enforcement action in relation to a multitude of businesses providing debt management or credit services, including cancelling credit licences, issuing infringement notices, and commencing legal proceedings in the Federal Court.
ASIC will commence surveillance of this sector by reviewing how 100 licensees comply with the law. ASIC's announcement comes as ASIC Commissioner Alan Kirkland stated:
"we have had numerous accounts of debt management firms making promises to vulnerable consumers that may not have been kept...stories like these are disturbing and if we detect unfair and unlawful practices, we will take enforcement action".
This review aligns with ASIC's wider enforcement priorities and aims to strengthen practices across the sector. The findings of the review will be published in a public report in 2026.
What do debt management and credit repair firms need to do?
ASIC has made it clear that consumers dealing with debt management or credit firms should be aware that they can complain to firms about their services and that any complaints which are not satisfactorily resolved can be escalated to AFCA. In light of ASIC's announcement, debt management and credit repair firms can do the following to help ensure they are complying with their licence obligations:
- Ensure complaints are acknowledged and dealt with promptly and in accordance with Regulatory Guide 271;
- Ensure breaches and incidents are identified, resolved and reported to ASIC where required;
- Review marketing and promotional material to ensure it is appropriate for your target audience and does not include any false or misleading representations;
- Ensure your employees and representatives are appropriately trained and determine whether any additional training, including in relation to complaints and dealing with consumers is required;
- Consider compliance policies and procedures and whether these need to be amended to better align with the law or your operations;
- Consider your risk management and cyber security protocols, particularly in relation to ensuring consumer data is securely stored.
Sophie Grace has a compliance program which has been developed for debt management and credit repair firms available to purchase on our website.
If you are currently operating a debt management or credit business and are unsure if you are meeting your obligations, please contact us.
Further Reading
- ASIC probes debt management and credit repair services
- Credit Licence Compliance Requirements
- ASIC Strengthens Oversight of Credit and Debt Management
- Debt Management Reforms: Credit Licensing
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
