Regulator to examine industry practices following consumer complaints
The Australian Securities and Investments Commission (ASIC) has announced a review of the debt management and credit repair sector, citing concerns about consumer protection, particularly for those facing financial difficulties.
The review will assess how approximately 100 licensed businesses in the sector comply with legal requirements and will examine the range of business models used by debt management and credit repair firms.
ASIC said the review will focus on cases where companies may have failed to meet the terms of their agreements, charged excessive fees for minimal or no service, or failed to communicate effectively with clients.
“We are concerned some licensees may be failing to engage in credit activities efficiently, honestly and fairly, leaving financially vulnerable consumers worse-off as a result,” said Alan Kirkland, commissioner at ASIC. “We have heard numerous accounts of debt management firms making promises to vulnerable consumers that may not have been kept.”
Kirkland cited examples where consumers were left without answers or support from their debt management firms. “In one instance, we heard that a woman could not get an answer on why her debt management firm was not making any payments to her creditors,” he said. “After numerous calls to the firm, she was told to enter into bankruptcy with no further explanation.”
“Another 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. Stories like these are disturbing and if we detect unfair and unlawful practices, we will take enforcement action to protect consumers.”
ASIC plans to release findings from the review in a public report in 2026. The regulator said the project is part of its ongoing enforcement priorities and aims to improve standards across the sector while addressing risks to consumers.
The review is expected to have implications for the mortgage sector, as many borrowers who experience financial hardship may turn to debt management and credit repair services. Increased scrutiny and potential reforms could affect how mortgage brokers and lenders interact with clients who are seeking assistance with debt, as well as influence the advice and support provided to consumers navigating mortgage stress or arrears.
A licensing regime for debt management and credit repair firms was introduced in 2021 to protect consumers from harmful practices. Under this regime, businesses must hold a credit licence, comply with the National Consumer Credit Protection Act 2009, and be members of the Australian Financial Complaints Authority.
ASIC has previously taken action against firms in the sector. In August 2023, ASIC began Federal Court proceedings against Bakken Holdings, operator of Solve My Debt Now, over concerns about consumer harm. In June 2025, ASIC refused Bakken’s application for a credit licence, preventing the company from offering debt management services. In April 2025, ASIC issued two infringement notices to Chapter Two Holdings for alleged misleading statements on its website about debt management outcomes.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
