ASIC has made a final stop order preventing Indy-C-Fashion Accessories Pty Ltd (Indy-C) from offering Centrepay credit arrangements to consumers in its store in Katherine.
An ASIC Delegate determined that Indy-C offered its credit arrangements without making a Target Market Determination (TMD) which is required to ensure suitable financial products are provided to consumers, having regard to their needs and objectives.
When Indy-C did make a TMD, the ASIC Delegate determined that if the credit arrangement was distributed in the way it suggested, it would not be reasonable to conclude that it would be likely that a consumer receiving the credit arrangement was in the target market.
ASIC Deputy Chair Sarah Court said, 'Indy-C provided credit arrangements to First Nations consumers to purchase clothing and household goods via deductions from their Centrelink benefit payments in circumstances where ASIC considers it did so without considering whether the credit arrangement would be consistent with the consumer's objectives, financial situation, and needs. Following regulatory action from ASIC, Indy-C made multiple draft TMDs, however ASIC considers none complied with Indy-C's design and distribution obligations (DDOs).
'This is the second time ASIC has made a final stop order to prevent a business from offering vulnerable consumers a credit arrangement where we consider the arrangement to be non-compliant with the DDOs. We will continue to use our full range of powers, including stop orders, to disrupt entities in these circumstances.'
Background
Prior to 30 September 2024, Indy-C offered credit through deferred deduction arrangements via Centrepay, and was therefore required to comply with DDOs, which include the requirement to design and distribute financial products, such as credit facilities, with appropriate consideration of consumers' likely needs and objectives, and to take reasonable steps to ensure that those products are distributed consistently with the nominated target market. By offering its credit arrangement, Indy-C was required to publish a TMD, a document which must identify the target market and outline the conditions on the way in which the product is distributed, amongst other things.
On 30 September 2024, ASIC made an interim stop order (24-216MR) against Indy-C, preventing it from entering new Centrepay credit arrangements with consumers to pay for goods via deductions from their Centrelink benefits, due to its failure to make a TMD. The interim stop order was initially in place for 21 days, which was followed by an indefinite interim stop order, put in place while the ASIC Delegate considered their final decision.
Indy-C submitted a number of draft TMDs in an effort to address the concerns outlined by ASIC. Despite being provided additional time to address the deficiencies identified in these draft TMDs, the ASIC Delegate found that Indy-C did not produce a compliant TMD and relevant policies to prevent vulnerable consumers from entering into the credit arrangements. As a result, the ASIC Delegate was satisfied that Indy-C had not rectified its breach of the DDOs, as its TMD was not adequate, and that if Indy-C did offer the credit arrangements to consumers in the way it described in its TMD, it is not reasonable to conclude that it would be likely that those consumers would be within the identified target market.
Services Australia administers the Centrepay program and keeps a register of businesses which have been approved to enter Centrepay deduction arrangements with consumers. Services Australia has suspended Indy-C from entering new credit arrangements or extending existing arrangements through Centrepay.
ASIC's Indigenous Outreach Program works across ASIC to provide advice, insights, and support to ensure ASIC's engagement with First Nations peoples is culturally appropriate and sensitive.
First Nations consumers can contact ASIC's Indigenous Outreach Program on our dedicated Indigenous Helpline on 1300 365 957.
Mob Strong Debt Helpline on 1800 808 488 can assist if you are experiencing financial hardship.
ASIC's Moneysmart website has further information on managing money for First Nations consumers.
Indy-C has the right to seek a review of ASIC's decision in the Administrative Review Tribunal.
