ASIC has commenced Federal Court proceedings against non-bank lender Oak Capital alleging predatory lending practices that circumvented consumer protections. as the regulator ups its fight against predatory lending practices.
ASIC contends that Oak Capital engaged in “unconscionable conduct to avoid the National Credit Code” through its lending practices, which reportedly involved 47 loans worth more than $37 million between March 2019 and October 2023.
According to ASIC, Oak Capital's lending model required companies to act as borrowers, effectively sidestepping the National Consumer Credit Protection Act.
This approach allegedly led to property repossessions among clients who defaulted on their loans due to exorbitant costs.
“Oak Capital made loans to companies with no or minimal assets or current trading activities, and even companies that had been established for the purpose of obtaining the loan only days prior to the loan settlement,” ASIC alleges.
“Given their distressed financial circumstances, several individuals defaulted on their loans and Oak Capital repossessed their homes.
ASIC claims Oak Capital's loan terms featured high interest rates ranging from 11.6% to 23.2% and fees as steep as 50.1%, forcing many borrowers into financial distress.
One notable example cited by ASIC involved a home loan refinanced at a 22% interest rate, along with a $62,841 loan fee.
ASIC deputy chair Sarah Court emphasised that the regulator was focused on curbing predatory lending, especially as more Australians sought financial assistance amid economic strain.
She said, ASIC was also targeting consumer loans, “Like the short-term loan dealer who was charging more in fees than the value of the loan itself, so the company made more than double in fees than it provided in credit.
“Or the one that charged an unemployed consumer more than $4,000 for a vacuum cleaner that could have been bought for $999.”
“We want these actions to send a clear message – ASIC is watching, and ASIC will take action,” she said.
The regulator is also scrutinising lenders’ hardship processes, criticising obstacles that deter borrowers from seeking aid.