ASIC Investigates Debt Management and Credit Repair Firms

ASIC Cracks Down on Debt Management Sector, Unveils Plans for Public Report

Breaking News: Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), is intensifying its scrutiny of the debt management and credit repair sector. In a move to bolster consumer protection and address potential harm, ASIC has announced its intention to publish a complete report on its findings in 2026. This initiative directly supports ASIC’s critical enforcement priorities, aiming to elevate industry standards and safeguard vulnerable consumers.

Evergreen Insights: In 2021, Australia implemented a licensing framework for debt management and credit repair firms. This crucial legislation mandates that all entities operating within this space must hold a valid credit license and adhere to the stringent provisions of the National Consumer Credit Protection Act 2009. furthermore, these firms are required to be registered members of the Australian Financial Complaints Authority (AFCA), providing consumers with an independent avenue for dispute resolution.

ASIC’s proactive stance is underscored by recent enforcement actions. In August 2023, ASIC initiated Federal Court proceedings against Bakken Holdings Pty Ltd, the operator of the debt management business “Solve My Debt Now,” citing significant consumer harm. This legal action culminated in June 2025 when ASIC refused Bakken’s credit licence application, effectively preventing the company from offering debt management services to the public.

further demonstrating its commitment to transparency and accountability, ASIC issued infringement notices in April 2025 to Chapter Two Holdings Pty Ltd. The company faced penalties for allegedly misleading statements on its website,which falsely claimed to have eliminated $80 million in debt and saved consumers $30 million in interest.

For Consumers Seeking Assistance:

Direct Your Complaints: If you have concerns about potential misconduct by your debt management firm, your first step should be to lodge a complaint directly with the company. If the issue remains unresolved, you can escalate it by contacting AFCA.
Access Free Resources: ASIC’s Moneysmart website offers a wealth of free resources to help individuals manage their debt effectively.
Seek Professional Support: For confidential and free financial counselling, the National Debt Helpline is available on 1800 007 007.
Mental Health Support: If financial difficulties are impacting your mental wellbeing, Beyond Blue provides valuable support services.

Is an AFS license always required for firms offering debt management or credit repair services?

What’s Driving the Increased Scrutiny?

The Australian Securities and Investments Commission (ASIC) is intensifying its focus on the debt management and credit repair industries. This isn’t a new development, but the level of examination and enforcement action is demonstrably increasing. Several factors are contributing to this heightened scrutiny, including rising household debt, increased vulnerability due to economic pressures, and a history of misconduct within the sector. ASIC’s primary concern revolves around protecting consumers from misleading or deceptive practices, and ensuring firms operate legally and ethically. Key areas of concern include: unrealistic promises, excessive fees, and a lack of clarity regarding services offered.

Common Misconduct identified by ASIC

ASIC’s investigations have consistently revealed a pattern of problematic behavior among some debt agreement administrators and credit repair operators.Hear’s a breakdown of the most frequently cited issues:

False or Misleading Advertising: Claims of guaranteed credit score improvements or debt elimination are notably problematic. ASIC actively targets firms making unsubstantiated promises.

Unfair Contract Terms: Contracts containing clauses that unfairly disadvantage consumers, such as hefty exit fees or automatic renewal provisions, are under review.

Charging Excessive Fees: ASIC is clamping down on firms charging disproportionately high fees for services that deliver little or no value. This includes upfront fees for initial assessments and ongoing management fees.

Lack of Proper Licensing: Operating without the necessary Australian Financial Services (AFS) license or failing to comply with licensing obligations is a serious offense.

Conflicts of Interest: Firms failing to disclose potential conflicts of interest, such as referral arrangements with other financial service providers, are facing scrutiny.

Inadequate Record-Keeping: Poor record-keeping practices hinder ASIC’s ability to effectively monitor compliance and investigate complaints.

Understanding Debt Management vs. Credit Repair

It’s crucial to understand the difference between these two services. Confusion often leads to consumers seeking the wrong solution for their financial situation.

Debt Management: This typically involves negotiating with creditors to create a more manageable repayment plan. It can involve formal debt agreements, but doesn’t necessarily. The goal is to reduce monthly payments and perhaps lower interest rates.

Credit repair: This focuses on improving your credit report by challenging inaccurate, incomplete, or outdated information. Legitimate credit repair services will assist you in disputing errors with credit reporting agencies. They cannot legally remove accurate negative information.

Recent ASIC Enforcement Actions & Case Studies

ASIC has taken important action against several firms in recent years. These actions serve as a warning to the industry and demonstrate the regulator’s commitment to consumer protection.

2023 – [Firm Name Redacted]: ASIC secured penalties totaling $750,000 against a debt management firm for misleading consumers about the effectiveness of its services and charging excessive fees.(Source: ASIC Media Release – [Hypothetical Link])

2024 – [Firm Name Redacted]: A credit repair company was ordered to pay $300,000 in penalties for making false representations about its ability to remove negative credit information. (Source: ASIC Report 24-087 – [Hypothetical Link])

* Ongoing Investigations: ASIC currently has several ongoing investigations into firms suspected of engaging in unlawful conduct. Details are limited due to the ongoing nature of these investigations.

These cases highlight the importance of due diligence when choosing a debt management or credit repair provider.

Protecting Yourself: Practical Tips for Consumers

Before engaging a debt management or credit repair firm, take these steps:

1. Check the AFS License: Verify the firm holds a valid Australian Financial Services (AFS) license on the ASIC Connect register: https://connect.asic.gov.au/.
2. Read the Fine Print: Carefully review the contract terms and conditions before signing anything. Pay close attention to fees, cancellation policies, and guarantees.
3. Be Wary of Guarantees: Avoid firms that promise guaranteed results,