Car Finance Crackdown: ASIC Warns Lenders Over Poor Oversight of Dealerships

The Australian Securities and Investments Commission (ASIC) is intensifying its scrutiny of the car finance sector, specifically targeting lenders for what it describes as a critical failure in oversight of their sales channels.

The regulator\’s review alleges a widespread lack of regular audits and checks by some lenders who primarily rely on intermediaries, such as brokers and dealerships, to arrange finance for customers. This breakdown in governance is directly linked to poor outcomes for consumers.

ASIC found that the delegation of sales to third parties—the dealers and brokers—has created an environment where excessive fees and unaffordable lending are flourishing. The evidence of this failure is stark:

Almost 50% of customers who defaulted on their car loans did so within the first six months, indicating loans were likely unsuitable from the outset.

Following the repossession and sale of vehicles, nearly 90% of those consumers were still left owing substantial debt, often more than half of their original loan amount.

ASIC Commissioner Alan Kirkland emphasised that these figures are consistent with key complaints and point to systemic issues with responsible lending requirements.

ASIC has already issued tailored action letters to lenders based on its preliminary findings, laying out specific requirements for improving compliance and oversight of their distribution channels.

The regulator is determined to force improvements and drive accountability in the sector.

\”We\’ve identified areas where lenders must lift their standards, or risk leaving consumers exposed to poor financial outcomes,\” Kirkland said. \”ASIC will take enforcement action to protect consumers where appropriate.\”

The final, detailed findings of ASIC\’s investigation, which will include information on how lenders are responding to the regulator’s demands, are scheduled to be released in 2026.