ASIC’s product intervention orders reinforce important consumer protections. In short, the orders prohibit the provision of short term credit and continuing credit contracts which involve unreasonably high fees charged to retail clients, in excess of the cost caps in the relevant exemptions in subsections 6(1) and 6(5) of the National Credit Code (Code).

The product intervention orders apply to short term credit providers, continuing credit providers, their directors, their associates and their associates’ directors. Further the orders cover collateral contracts and contracts, arrangements or understandings belonging to a series or combination that constitutes the short term credit facility or continuing credit contract.

The orders only apply to contracts entered into on or after 15 July 2022, and will initially remain in force for 18 months. However, they may be extended beyond this 18 month period, in accordance with section 1023H of the Corporations Act 2001 (Cth) (which requires a declaration, by legislative instrument, and written approval by the Minister).

In its media release on 14 July 2022, ASIC noted that it will continue to ‘monitor the short term credit and continuing credit contracts markets and will take further regulatory and enforcement action as necessary, to address the risk of significant detriment and harm arising from the design and operation of these or similar products’.