Australia probes debt firms over term breaches and poor service

They may be failing to meet agreement terms or charging high fees, amongst others.

The Australian Securities and Investment Commission (ASIC) will launch a review of the debt management and credit repair sector’s compliance with the law.

Scenarios listed include licensees not meeting the terms of their debt management agreement; charging high fees for no or limited services; or not communicating adequately with clients.

In a statement, ASIC commissioner Alan Kirkland expressed concern that some players in the sector— which comprise around 100 licensees– may be failing to engage in credit activities efficiently, honestly, and fairly.

“We have heard numerous accounts of debt management firms making promises to vulnerable consumers that may not have been kept,” Kirkland said.

One instance involved a woman’s debt management firm not making any payments to her creditors. After numerous calls she was told to enter into bankruptcy, with no further explanation, ASIC said.

A separate man was at risk of having his car repossessed after his debt management firm failed to respond to default notices from creditors.

“When he cancelled his contract and asked for a partial refund from the debt management firm, they said there was a no-refund policy,” Kirkland said.

ASIC will publish insights from the review in a public report in 2026.

Australia first introduced a licensing regime for debt management and credit repair firms in 2021.

Entities operating under this regime are required to hold a credit licence and comply with provisions of the National Consumer Credit Protection Act 2009. They must also be a member of the Australian Financial Complaints Authority (AFCA).