The Australian Securities & Investments Commission has published findings from a review of consumer lease providers’ implementation of post-2022 reforms, identifying evidence of customer harm and warning that parts of the industry may be breaching consumer protection laws despite an overall contraction in the sector. The review found a significant decline in both the number and value of consumer leases as many providers exited the market, yet almost 25% of leases remained in arrears, pointing to continued financial vulnerability among users. ASIC highlighted that around 80% of repayments are collected via Centrepay deductions and noted that proposed Centrepay reforms would remove consumer leases from the regime, which could prompt further provider exits. Across the industry, ASIC observed inconsistent fee approaches that may breach the cap on costs, and inconsistent or deficient practices in reviewing bank statements and documenting suitability assessments. It also flagged room for improvement on compliance with the protected earnings amount (repayments capped at 10% of after-tax income), disclosure obligations, hardship handling, and anti-avoidance provisions; some providers are shifting into alternative regulated credit products such as sale of goods by instalment and lines of credit, which ASIC said can involve other consumer risks. ASIC encouraged all providers to review policies and procedures against the reforms and said it will continue monitoring conduct across consumer lease and short-term credit markets and take action where consumer harm is identified, citing its enforcement action against Walker Stores on 22 May 2025.
Australian Securities & Investments Commission 2025-05-22
Australian Securities & Investments Commission review finds consumer lease providers at risk of breaching new cost and suitability rules
ASIC's review of consumer lease providers post-2022 reforms shows potential breaches of consumer protection laws and ongoing customer harm. Nearly 25% of leases are in arrears, highlighting user financial vulnerability. With 80% of repayments via Centrepay, proposed reforms may cause more provider exits. The review found inconsistent fee practices, potential cost cap breaches, and issues with bank statement reviews and suitability assessments. Problems with compliance on protected earnings, disclosure, hardship handling, and anti-avoidance were noted, with some providers shifting to alternative credit products. ASIC urges reform alignment and will continue monitoring compliance, citing action against Walker Stores.