Anti-avoidance provisions for credit product intervention orders
This is a joint submission made on behalf of:
• Consumer Action Law Centre
• Financial Rights Legal Centre
• Indigenous Consumer Assistance Network
• Financial Counselling Australia
We support the anti-avoidance rule for product intervention orders (Draft Bill) and the accompanying Explanatory Memorandum to the Draft Bill (EM and Draft EM), and the proposal to introduce anti-avoidance provisions to prohibit conduct intended to avoid the operation of a product intervention order (PIO) made under the Corporations Act 2001, in relation to a credit facility. This would introduce added powers in relation to credit facility PIOs in line with the new anti-avoidance provisions available for PIOs issued under the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act), introduced by the Financial Sector Reform Act 2022 (Cth).
We outline below why the Draft Bill needs to be prioritised by demonstrating the legal limitations the Australian Securities and Investment Commission (ASIC) and the courts have been dealing with in relation to Cigno Pty Ltd. The fact that Cigno have managed to continue to lend for years demonstrates the need for anti-avoidance provisions to support ASIC’s PIOs.
Cigno’s conduct has not only caused significant harm to consumers experiencing vulnerability, attempts to stop them have also cost significant resources of ASIC and Government.
Read the full submission (PDF).230322_Corps Act PIO avoidance sub FINAL