The Australian Securities and Investment Commission (ASIC) has released preliminary insights into its current review (the review) of Australia’s motor vehicle finance sector. With preliminary findings pointing to several trends that warrant close attention from industry.
As part of the review, ASIC has taken a broad look at the motor vehicle finance sector and seeks to identify mechanisms to reduce consumer harm whilst improving outcomes for all car finance customers, including those in regional and remote areas and First Nations communities.
The review has taken the step of charting and examining the entire customer journey – from the loan application stage, assessment, hardship support and dispute resolution. ASIC identified issues such as unaffordable loans and substantial variations in establishment fees, including one case where a $49,000 loan incurred $9,000 in fees. These practices have led to poor outcomes for consumers, particularly for vulnerable groups.
In response, ASIC has issued tailored action letters to eight lenders who have been involved in the review. Those letters have recommended improvements in areas such as staff training, risk management, hardship processes, and governance frameworks. ASIC have advised that detailed findings from the review will be published in 2026. Dealers should note that ASIC have also confirmed that addressing misconduct in used car finance for vulnerable consumers remains a key ASIC enforcement priority in 2025 and 2026.
AADA members who act as intermediaries and arrange consumer vehicle finance are encouraged to consult directly with their finance providers regarding any concerns they may have with the review and ensure that the finance company are working within the legislative requirements of the National Consumer Credit Protection (NCCP) Act 2009 (Cth).
The AADA met with ASIC ahead of the release of their preliminary insights and is in regular dialogue with the Australian Finance Industry Association (AFIA), the peak body representing the finance industry. AADA remains confident that the overwhelming majority of our members are adhering to their responsible lending obligations. While it is unclear to what extent new car dealers or AADA members have been the focus of ASIC’s current investigation, dealers should expect a period of heightened scrutiny.
