Lenders told to ‘support customers’ facing hard times
Lenders are being warned to remain within Australia’s corporate watchdog as households face financial difficulties as the country enters an uncertain economic period.
The outgoing chairman of the Australian Securities and Investments Commission will offer the advice in his final keynote address at a conference on Thursday before clearing his desk at the end of this month.
“These are difficult times for many people in Australia, which makes it even more urgent for lenders to support customers experiencing financial distress,” chairman Joe Longo said.
“We are not backing down on this and continue to monitor how lenders support their customers.
“And if hardship supports are broken, debt management and credit repair services should not put people in even greater financial difficulty.”
When deputy chair Sarah Court takes over from Mr Longo in July, the commission will publish a report on high-fee debt management and credit repair services.
ASIC will also publish another report on debt collection and motor vehicle finance later in the year.
“Let me be clear, if a pattern is driven by oppression, transparency or harm, ASIC will step in,” Mr Longo told attendees at the Australian Financial Advisory conference in Cairns.
Mr Longo, who has been chairman since 2021, also defended the work of the commission, which had to up its game and rebuild trust following negative findings from the banking royal commission in 2019.
The investigation revealed widespread financial industry abuses that harmed consumers and put the regulator on notice for failing to hold firms to account.
“Responsibility works best when it is seen and felt,” Mr. Longo said in his speech.
“This means regulators cannot work behind closed doors and watchdogs must both bark and bite to be effective.”
Going forward, Mr Longo said the commission would continue to focus on financial literacy through its Moneysmart website, particularly trying to protect Australians from superannuation scams.
“Recently, we have witnessed unscrupulous actors attempting to siphon significant amounts of money from our pension system in what we suspect is abuse on an industrial scale,” Mr. Longo said.
“Ordinary Australians who signed up for a free supercheck have instead lost their life savings.”
Mr Longo will also condemn the funds’ practice of “lead generation”, using cold calling to encourage people to switch retirement funds with the promise of big returns and often at greater risk.
Recently, this practice resulted in thousands of investors moving into the Shield Master and First Guardian Master funds facing collective losses of more than $1 billion.
He will argue that the federal government, which plans to make changes to superpass, should ban unlicensed communications about retirement.
“We wouldn’t allow someone to perform heart surgery just because they’ve seen too many emergency rooms,” Mr. Longo said.
“That’s why we must not allow unqualified individuals to persuade Australians to lose their life savings and profit from it.”
