Consumer Action, Financial Rights Legal Centre and WEstjustice have made a second submission to the Australian Securities and Investment Commission’s (ASIC) Consultation Paper 330 (CP 330), in which ASIC proposes to use product intervention power to stop a harmful lending model used by Cigno Pty Ltd and BHF Solutions Pty Ltd.
The order would stop Cigno and other companies from imposing exorbitant and unreasonable fees upon consumers through collateral contracts operating alongside unregulated continuing credit contracts. We continue to support and encourage ASIC to make the product intervention order as quickly as possible. Cigno and BHF Solutions still appear to be issuing loans, despite ASIC recently commencing legal proceedings against them for unlicensed lending.
The second submission responds to proposed changes to the draft product intervention order released by ASIC, that would exclude buy now pay later (BNPL) arrangements and non-cash payment facilities (NCP Facilities) from the operation of the order. We hold concerns about the changes proposed by ASIC to the draft order. We oppose the blanket exemption for the BNPL industry, considering the BNPL industry predominantly market the product’s low fees and no interest. There is also a risk that both the BNPL and NCP Facility exemptions could allow unscrupulous lenders to avoid the order, resulting in similar harm that CP 330 aims to stop.
We accordingly recommend further changes to the amendments that provide the BNPL exception, and recommend removing the NCP Facilities exemption altogether.201124_ASIC_CP330_PIP_consult2_FINAL