The Australian Securities and Investments Commission (ASIC) has announced its plan to investigate the debt management and credit repair industry, aiming to enhance consumer protection for those facing financial difficulties.

It said it had received a number of “disturbing” stories of illegal and unfair practices from licensed professionals.

“For example, there was a report of a woman who couldn’t get a clear explanation from her debt management company about why her creditors were not receiving any payments,” stated ASIC Commissioner Alan Kirkland.

“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.”

ASIC’s investigation will review how well debt managers are following the law, following the introduction of a licensing scheme in 2021.

It will publish its findings next year.